WMF GROUP LTD, S-1/A, 1997-10-30

WMF GROUP LTD
S-1/A, 1997-10-30
REAL ESTATE AGENTS & MANAGERS (FOR OTHERS)

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 30, 1997

REGISTRATION NO. 333-37447

================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------

AMENDMENT NO. 1 ON

FORM S-1 TO FORM S-3

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------

THE WMF GROUP, LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)

6162
(PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NO.)

54-1647759
(I.R.S. EMPLOYER
IDENTIFICATION NO.)

1593 SPRING HILL ROAD
SUITE 400
VIENNA, VIRGINIA 22182
(703) 610-1400
(ADDRESS, INCLUDING ZIP CODE,
AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S
PRINCIPAL EXECUTIVE OFFICES)

SHEKAR NARASIMHAN
1593 SPRING HILL ROAD
SUITE 400
VIENNA, VIRGINIA 22182
(703) 610-1400
(NAME, ADDRESS, INCLUDING ZIP CODE,
AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)

------------------
Copy to:
RICHARD W. CASS
WILMER, CUTLER & PICKERING
2445 M STREET, N.W.
WASHINGTON, D.C. 20037
(202) 663-6000
------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after effectiveness of the Registration Statement.
------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
============================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE PRICE PER OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED UNIT(2) PRICE(2) FEE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value to be distributed
to holders of NHP Incorporated's common stock... 4,602,730(1) $4.99 $22,979,436 $6,964
============================================================================================================
</TABLE>

(1) Approximate number of shares of The WMF Group, Ltd.'s Common Stock expected
to be distributed based upon a distribution ratio of one share of The WMF
Group, Ltd.'s Common Stock for every three shares of NHP Incorporated's
common stock held by each shareholder.

(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f)(2) of the Securities Act based on a book value
of $22,979,436 as of June 30, 1997.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.

================================================================================
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE DISTRIBUTED
PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
INFORMATION STATEMENT/PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION, OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED OCTOBER 30, 1997

INFORMATION STATEMENT/PROSPECTUS

WMF GROUP LOGO

DISTRIBUTION OF UP TO 4,602,730 SHARES
OF COMMON STOCK OF THE WMF GROUP, LTD.
TO STOCKHOLDERS OF NHP INCORPORATED
---------------------

This Information Statement/Prospectus is being furnished by NHP
Incorporated, a Delaware corporation ("NHP"), in connection with the
distribution (the "Share Distribution") by NHP to the holders of shares of NHP
Common Stock, par value $.01 per share (the "NHP Common Stock"), of all of the
issued and outstanding common stock, par value $.01 per share (the "Company
Common Stock"), of The WMF Group, Ltd. (along with its subsidiaries the
"Company") (formerly known as NHP Financial Services, Ltd. and WMF Holdings
Ltd.), a Delaware corporation and a wholly-owned subsidiary of NHP. On May 9,
1997, NHP distributed to each holder of record of NHP Common Stock ("NHP
Stockholders") on May 2, 1997, one right (a "Right") for each share of NHP
Common Stock pursuant to a Rights Agreement, dated as of April 21, 1997 between
NHP, the Company and The First National Bank of Boston (the "Rights Agreement").
Subject to certain conditions, each holder of Rights is entitled to one-third of
a share of Company Common Stock for each Right at the earlier of (i) the
effective time of the proposed Merger between NHP and a wholly owned subsidiary
of Apartment Investment and Management Company ("AIMCO") and (ii) December 1,
1997 (such time being referred to as the "Maturity Time"). NHP does not expect
certain conditions to the Share Distribution to be satisfied prior to the
effective time of the Merger; and therefore expects that the Share Distribution
will occur at the time of the Merger, which will be after December 1. NHP
Stockholders will receive cash in respect of fractional shares of Company Common
Stock that would otherwise be distributed at the rate of $9.15 per share of
Company Common Stock. Upon completion of the Share Distribution, the Company
will operate independently of NHP.

This Information Statement/Prospectus also relates to the distribution of
420,615 shares of Company Common Stock that are expected to be received in the
Share Distribution by Capricorn Investors, L.P. ("Capricorn") to the partners of
Capricorn (the "Capricorn Distribution"). The Capricorn Distribution is expected
to occur promptly after the Share Distribution.

The NHP Stockholders will not be required to pay any consideration for the
shares of Company Common Stock they receive in the Share Distribution. There is
no current public trading market for the Company Common Stock and there is no
guarantee that a public trading market will be sustained. WMF intends to seek
approval for quotation of the shares of Company Common Stock on the Nasdaq Stock
Market upon issuance, but there is no assurance that such approval will be
obtained or that an active market will develop following the Share Distribution.

IN REVIEWING THIS INFORMATION STATEMENT/PROSPECTUS, STOCKHOLDERS SHOULD
CAREFULLY CONSIDER THE MATTERS DESCRIBED UNDER THE HEADING "RISK FACTORS"
BEGINNING ON PAGE 6.

THIS INFORMATION STATEMENT/PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS
ABOUT BUSINESS STRATEGIES, MARKET POTENTIAL, FUTURE FINANCIAL PERFORMANCE AND
OTHER MATTERS. SUCH STATEMENTS INVOLVE MANY RISKS AND UNCERTAINTIES THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM SUCH STATEMENTS, INCLUDING,
WITHOUT LIMITATION, THOSE RISKS AND UNCERTAINTIES DESCRIBED UNDER THE HEADING
"RISK FACTORS" BEGINNING ON PAGE 6.

---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS INFORMATION STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------

THE DATE OF THIS INFORMATION STATEMENT/PROSPECTUS IS , 1997
<PAGE> 3

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"SEC") a Registration Statement on Form S-1 (including exhibits, schedules and
amendments thereto, the "Registration Statement") pursuant to the Securities Act
of 1933, as amended (the "Securities Act") with respect to the Company Common
Stock. This Information Statement/Prospectus, while forming a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement. Reference is hereby made to the Registration Statement
for further information with respect to the Company and the securities to be
distributed to the NHP Stockholders in the Share Distribution. Statements
contained herein concerning the provisions of documents filed as exhibits to the
Registration Statement are necessarily summaries of such documents, and each
such statement is qualified in its entirety by reference to the copy of the
applicable document filed with the SEC.

The Registration Statement is available for inspection and copying at the
public reference facilities maintained by the SEC at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, as well as the Regional Offices of the SEC
at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such information can be obtained by mail from the Public Reference
Branch of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates, or on the Internet at http://www.sec.gov.

Following the Share Distribution, the Company will be subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and, in accordance therewith, will file reports, proxy
statements and other information with the SEC that will be available for
inspection and copying at the SEC's public reference facilities referred to
above. Copies of such material can be obtained by mail at prescribed rates by
writing to the Public Reference Branch of the SEC at the address referred to
above. In addition, it is expected that reports, proxy statements and other
information concerning the Company will be available for inspection at the
Nasdaq Stock Market, 1735 K Street, N.W., Washington, D.C. 20006.

The Company intends to furnish its stockholders annual reports containing
financial statements audited by its independent auditors. The Company does not
intend to furnish its stockholders quarterly reports.

Questions concerning the Share Distribution should be directed to Ann Torre
Grant at (703) 394-2420. After the Share Distribution, holders of Company Common
Stock having inquires related to their investment in the Company should contact
Michael D. Ketcham at (703) 610-1400.

NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS INFORMATION
STATEMENT/PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.

------------------------

UNTIL THE EXPIRATION OF THE TWENTY-FIFTH CALENDAR DAY FOLLOWING THE SHARE
DISTRIBUTION (AS DEFINED HEREIN) ALL DEALERS EFFECTING TRANSACTIONS IN THE
REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER AN INFORMATION STATEMENT/PROSPECTUS.
<PAGE> 4

TABLE OF CONTENTS

<TABLE>
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PAGE
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<S> <C>
SUMMARY............................................................................... 1
The Company......................................................................... 1
The Distribution of Company Common Stock............................................ 2
Dividend Policy..................................................................... 3
Summary Risk Factors................................................................ 4
Summary Financial Information....................................................... 4
RISK FACTORS.......................................................................... 6
Absence of Prior Trading Market and Possible Volatility of Stock Price.............. 6
Need for Additional Capital......................................................... 6
Risks of Inability to Complete or Successfully Integrate Acquisitions or Enter into
New Business Lines............................................................... 7
Relationship with NHP; Potential Conflicts of Interest.............................. 7
Control by Majority Stockholders.................................................... 8
Risk of Loss on Mortgage Loans Sold Under DUS Program............................... 8
Retained Risks of Mortgage Loans Sold............................................... 9
Risks of Loss from Changes in General Economic Conditions........................... 9
Possible Loss of Value from Impairment of Mortgage Servicing Rights................. 9
Risks of Loss of Certain Advanced Funds............................................. 10
Losses Upon Termination of Certain Servicing Contracts.............................. 10
Uncertainties Resulting from Government Regulation and Changes in Government
Programs......................................................................... 10
Risks of Securitization............................................................. 11
Risks of Hedging Transactions....................................................... 11
Reliance on Key Personnel........................................................... 11
Dependance on Sales Staff........................................................... 12
Competition......................................................................... 12
No Anticipated Stockholder Distributions............................................ 12
Substantial Number of Shares Eligible for Future Sale............................... 12
Anti-Takeover Provisions............................................................ 12
THE DISTRIBUTION OF COMPANY COMMON STOCK.............................................. 14
Description of the Distribution..................................................... 14
Expenses of the Distribution........................................................ 15
Reasons for the Distribution........................................................ 15
Federal Income Tax Consequences of the Rights Distribution and the Maturity of the
Rights........................................................................... 15
Effect on Outstanding NHP Options................................................... 17
Effect of the Share Distribution on Ownership of NHP and the Company................ 18
Restrictions on Transfer............................................................ 18
The Capricorn Distribution.......................................................... 18
ARRANGEMENTS BETWEEN NHP AND THE COMPANY AFTER THE SHARE DISTRIBUTION................. 19
CAPITALIZATION........................................................................ 20
SELECTED FINANCIAL DATA............................................................... 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION........................................................................... 23
Overview............................................................................ 23
Results of Operations -- Summary.................................................... 23
Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996........... 24
1996 Results of Operations Compared to 1995......................................... 26
1995 Results of Operations Compared to 1994......................................... 28
Liquidity and Capital Resources..................................................... 29
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
Inflation............................................................................. 31
New Accounting Standards.............................................................. 31
INDUSTRY OVERVIEW..................................................................... 33
BUSINESS.............................................................................. 34
Company Overview...................................................................... 34
Strategic Objectives.................................................................. 34
Mortgage Origination.................................................................. 36
Mortgage Underwriting................................................................. 38
Mortgage Servicing.................................................................... 39
Interest Rate Sensitivity............................................................. 40
Regulation............................................................................ 41
Competition........................................................................... 42
Legal Proceedings..................................................................... 42
Employees............................................................................. 42
Properties............................................................................ 42
MANAGEMENT OF THE COMPANY............................................................. 43
Directors and Executive Officers...................................................... 43
Executive Compensation................................................................ 45
Directors Compensation................................................................ 46
Employment Contracts and Related Matters.............................................. 47
Compensation Committee Interlocks and Insider Participation........................... 47
RELATED PARTY TRANSACTIONS............................................................ 48
PRINCIPAL STOCKHOLDERS OF THE COMPANY................................................. 49
DESCRIPTION OF THE COMPANY CAPITAL STOCK.............................................. 51
General............................................................................... 51
Common Stock.......................................................................... 51
Preferred Stock....................................................................... 51
Director and Officer Liability........................................................ 51
Certain Provisions Affecting Stockholders............................................. 52
Transfer Agent & Registrar............................................................ 52
INDEPENDENT PUBLIC ACCOUNTANTS........................................................ 52
LEGAL MATTERS......................................................................... 53
</TABLE>

<PAGE> 6

SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial information appearing elsewhere in this Information
Statement/Prospectus. Except as set forth in the financial statements or as
otherwise noted herein, all information contained in this Information
Statement/Prospectus gives effect to a 789.94 for one stock split of the Company
Common Stock (as defined herein) which occurred on October 3, 1997. Unless the
context requires otherwise, references to the "Company" refer to The WMF Group,
Ltd. (formerly known as NHP Financial Services, Ltd.) and its subsidiaries.

THE COMPANY

The Company is one of the largest independent commercial mortgage bankers
in the United States as measured by servicing portfolio size based on a 1996
survey (the "MBA Survey") published by the Mortgage Bankers Association of
America (the "MBA") and the largest originator of multifamily and healthcare
loans insured by the Federal Housing Administration (the "FHA") based on
statistics provided by the U.S. Department of Housing and Urban Development. The
Company originates, underwrites, structures, places, sells and services
multifamily and commercial real estate loans. Through its relationships with
government sponsored entities ("GSEs"), investment banks, life insurance
companies, commercial banks and other investors, the Company provides and
arranges financing to owners of multifamily and commercial real estate on a
nationwide basis using both a retail and wholesale network. The Company
generates revenues through origination fees, servicing fees, net interest income
on loans held for sale and placement fees. As of June 1996, the Company was the
tenth largest servicer of multifamily and commercial real estate loans in the
country based on the 1996 MBA Survey. At the time of the survey, the Company
serviced a portfolio of approximately $4.9 billion, and the average portfolio
size for the top ten servicers was approximately $10.4 billion. In the year
ended December 31, 1996 and the first half of 1997, the Company originated $1.1
billion and $622.4 million, respectively, of multifamily and commercial real
estate mortgages.

The Company believes that it is well positioned to compete effectively in
the commercial real estate financing industry based on its capitalization,
geographic scope and services provided. The commercial and multifamily mortgage
banking industry is increasingly characterized by expensive technological
demands, large and sophisticated infrastructure for real estate underwriting and
risk evaluation, and the rapid emergence of the securitized market. These
developments will, in the Company's judgment, lead to the creation of
sophisticated and well-capitalized mortgage finance enterprises. The Company
seeks to use its existing infrastructure and leverage its market position to
increase market share of its established businesses and grow its non-multifamily
commercial business.

The Company seeks to increase reported earnings and cash flow through (i)
acquisitions and internal growth, (ii) design and delivery of new mortgage
products including bridge loan products and participating loan products, and
(iii) expansion into related businesses such as due diligence services and
issuance of commercial mortgage backed securities. At any given time, the
Company may be in discussions with one or more potential acquisition targets in
the multifamily and commercial mortgage businesses. Although the Company is
currently engaged in serious negotiations with respect to certain acquisitions
and has reached an agreement in principle with respect to one such acquisition,
it currently has no binding agreements pending with respect to acquisitions and
has not entered into any letters of intent with respect to pending acquisitions.
See "Business -- Strategic Objectives." There can be no assurance that such
discussions will result in an acquisition or that future acquisitions, if
completed, would be successful or that the Company will successfully develop any
particular product or enter into any particular product line. As a result of
acquisitions and internal growth, the Company has increased loan originations
from approximately $240 million in 1992 to approximately $1.1 billion in 1996
for a compound annual growth rate of 46.9 percent, and its servicing portfolio
has grown from approximately $3.0 billion to $6.2 billion for a compound annual
growth rate of 20.0 percent. In 1996 alone, the Company increased its portfolio
of serviced mortgages from $4.4 billion to $6.2 billion primarily as a result of
the acquisitions of Proctor & Associates of Michigan, Inc. ("Proctor") and
substantially all of the assets of American Capital Resource, Inc. ("ACR") (the
acquisitions of Proctor and ACR are referred to herein as the "Proctor
Acquisition" and the "ACR Acquisition," respectively.) In

1
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April 1997 the Company acquired substantially all of the mortgage banking assets
of Askew Investment Company (the "Askew Acquisition"), further increasing its
mortgage servicing portfolio by approximately $425 million.

The Company is a Delaware corporation formed in October 1992 to hold the
operations of WMF Huntoon, Paige Associates Limited ("WMF Huntoon Paige") and
Washington Mortgage Financial Group, Ltd. ("Washington Mortgage"), which are now
wholly-owned subsidiaries of the Company. WMF Huntoon Paige has carried on the
business of originating and servicing multifamily and healthcare mortgages
insured by the FHA under various owners and under various names since 1979 and
was acquired by Washington Mortgage in 1991. Washington Mortgage and entities it
has acquired have carried on the business of originating and servicing
multifamily and commercial mortgages under various owners and under various
names since 1984. The Company was acquired by NHP Incorporated ("NHP") on April
1, 1996. The principal executive offices of the Company are located at 1593
Spring Hill Road, Suite 400, Vienna, Virginia 22182, phone (703) 610-1400. See
"The Business of the Company" for more information.

THE DISTRIBUTION OF COMPANY COMMON STOCK

DESCRIPTION OF THE DISTRIBUTION

On May 9, 1997, NHP distributed to each holder of record of NHP Common
Stock at the close of business on May 2, 1997, one right (a "Right") for each
outstanding share of NHP Common Stock (the "Rights Distribution"). Each Right
entitles the holder to receive from the Company, or any successor thereof, a
distribution (the "Share Distribution" and, with the Rights Distribution, the
"Distribution") of one-third of a share of Company Common Stock, subject to the
terms of a Rights Agreement, dated as of April 21, 1997 (the "Rights Agreement")
between NHP, the Company and The First National Bank of Boston, as Rights Agent.
The Rights distributed on May 9, 1997 are evidenced by the certificates of NHP
Common Stock then outstanding. NHP Common Stock issued after May 9, 1997 and
prior to the Maturity Time (as defined below) will have a legend and reference
to the Rights Agreement. Subject to certain conditions, the Rights will mature
and NHP will distribute shares of Company Common Stock at the earlier of (i) the
effective time of the Merger (as defined below) and (ii) December 1, 1997 (such
time being referred to as the "Maturity Time"). NHP does not expect certain
conditions to the Share Distribution to be satisfied prior to the effective time
of the Merger, and therefore expects that the Share Distribution will occur at
the time of the Merger, which will be after December 1.

REASONS FOR THE DISTRIBUTION

Apartment Investment and Management Company ("AIMCO"), AIMCO/NHP
Acquisition Corp., a wholly-owned subsidiary of AIMCO ("Merger Sub") and NHP
have entered into an Agreement and Plan of Merger, dated as of April 21, 1997
(the "Merger Agreement"), pursuant to which Merger Sub will, subject to the
terms and conditions provided in the Merger Agreement, merge with and into NHP
(the "Merger"), thereby making NHP, as the surviving corporation, a wholly-owned
subsidiary of AIMCO (the "Surviving Corporation"). In addition, AIMCO and one of
its unconsolidated subsidiaries have purchased approximately 53.4 percent of the
outstanding shares of NHP Common Stock pursuant to a stock purchase agreement
(the "Stock Purchase Agreement") among AIMCO, Demeter Holdings Corporation
("Demeter") and Capricorn Investors, L.P. ("Capricorn"). AIMCO required that the
Rights Distribution occur as a condition to the Merger and the purchase of
shares of NHP Common Stock, and NHP believes that completion of the Merger while
allowing current stockholders of NHP the opportunity to retain an interest in
the business of the Company maximizes the value that stockholders of NHP will
receive in connection with the Merger. In addition, even if NHP were not
acquired by AIMCO, NHP believes that the Share Distribution, and the

2
<PAGE> 8

Company's subsequent status as a public company, will allow investors to
evaluate better the merits and outlook of the Company's business. The Share
Distribution would also give NHP stockholders and other potential investors the
flexibility to direct their investment to their specific area of interest,
property management or financial services, or to continue to retain an interest
in both areas. See "The Distribution of Company Common Stock -- Description of
the Distribution."

FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION

NHP will recognize gain as a result of the Rights Distribution combined
with the later maturity of the Rights. The amount of gain recognized by NHP will
be the excess of the fair market value of the Company Common Stock over NHP's
tax basis in the Company Common Stock. NHP's tax basis in the Company Common
Stock as of December 31, 1996 was approximately $23,400,000, and is subject to
further adjustment reflecting the Company's 1997 earnings and distributions. NHP
expects to have regular federal income tax net operating losses available in a
sufficient amount to offset the gain under the regular federal income tax, but
does not expect to have sufficient alternative minimum tax net operating losses
available to offset the gain under the federal alternative minimum tax.

Although the matter is not free from doubt, the Rights Distribution should
be treated for federal income tax purposes as a taxable distribution made on the
date of the distribution of the Rights (the "Rights Distribution Date") to the
NHP Stockholders of record on May 2, 1997. Assuming the Rights Distribution is
treated as a taxable event on the Rights Distribution Date, such distribution
will be a dividend to the extent of the current and accumulated earnings and
profits of NHP. The amount of the distribution is the fair market value of the
Company on the Rights Distribution Date. The portion of the Rights Distribution
that will be treated as a dividend cannot be finally determined until the end of
NHP's taxable year that includes the Rights Distribution. The portion of the
Rights Distribution in excess of the amount treated as a dividend will be
treated as a tax free return of basis to the extent of an NHP Stockholder's
basis in NHP Common Stock, and as a capital gain to the extent such portion
exceeds the NHP Stockholder's basis in NHP Common Stock. For a more complete
discussion of certain federal income tax consequences of the Distribution, see
"The Distribution of Company Common Stock -- Federal Income Tax Consequences of
the Rights Distribution and the Maturity of the Rights." NHP Stockholders are
urged to consult their own tax advisors.

RELATIONSHIP BETWEEN NHP AND THE COMPANY AFTER THE SHARE DISTRIBUTION

As a result of the Share Distribution, the Company will cease to be a
subsidiary of or otherwise affiliated with NHP and will thereafter operate as an
independent, publicly held company. However, as indicated under "Management,"
one director of NHP is a director of the Company and may continue in such dual
capacity at least until the Merger if the Share Distribution occurs before the
Merger. The Company and NHP will also enter into certain agreements providing
for (a) the orderly separation of NHP and the Company and the making of the
Share Distribution and (b) the allocation of certain tax and other liabilities.
See "Arrangements Between NHP and the Company after the Share Distribution."

THE CAPRICORN DISTRIBUTION

This Information Statement/Prospectus also relates to the Capricorn
Distribution, in which Capricorn will distribute all of the 420,615 shares of
the Company Common Stock it is expected to receive in the Share Distribution to
each of the partners of Capricorn in respect of their interest in Capricorn.
Neither the Company nor Capricorn will receive any consideration in connection
with the Capricorn Distribution.

DIVIDEND POLICY

The Company does not anticipate declaring and paying cash dividends on the
Company Common Stock in the foreseeable future. The decision whether to apply
any legally available funds to the payment of dividends on the Company Common
Stock will be made by the Board of Directors of the Company (the "Company
Board") from time to time in the exercise of its business judgment, taking into
account the Company's financial condition, results of operations, existing and
proposed commitments for use of the Company's funds and other relevant factors.
See "Description of Company Capital Stock -- Common Stock." The Company's
ability to pay dividends may be restricted from time to time by financial
covenants in its credit agreements or in arrangements with or regulations of
government sponsored entities.

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SUMMARY RISK FACTORS

In reviewing this Information Statement/Prospectus, stockholders should
carefully consider the matters described under the heading "Risk Factors"
beginning on page 6, including, among others, (i) the risks associated with the
absence of a prior trading market for shares of the Company Common Stock and the
fact that there can be no assurance that an effective trading market will
develop, (ii) the need of the Company for additional debt or equity capital to
implement its strategy effectively, (iii) the risks inherent in a strategy of
acquisitions including the fact that acquisitions may not be available or may
not be successfully completed or integrated into the business of the Company,
(iv) the fact that the Company will be effectively controlled by two
stockholders, (v) the risks inherent in the mortgage banking business, such as
the risk of losses on mortgages the Company retains in its portfolio or with
respect to which it retains a portion of the risk and the risk of loss resulting
from changes in interest rates and economic conditions in general, and (vi) the
risks inherent in servicing mortgages, including the impairment of servicing
rights and losses upon termination of contracts.

SUMMARY FINANCIAL INFORMATION

The following table sets forth selected financial and operating data of the
Company as of and for each of the years in the four-year period ended December
31, 1995, as of and for the three-month period ended March 31, 1996, as of and
for the nine-month period ended December 31, 1996 and as of and for the six-
month periods ended June 30, 1997 (unaudited) and June 30, 1996 (unaudited). The
data for the three-month period ended March 31, 1996 and the nine-month period
ended December 31, 1996 are presented separately as a result of the acquisition
of the Company, which was formerly known as WMF Holdings Ltd., by NHP effective
April 1, 1996 (the "Acquisition.") The table also sets forth pro forma income
statement data for the year ended December 31, 1996 giving effect to the
Acquisition as though it occurred January 1, 1996. The selected financial data
of the Company as of and for each of the years in the four-year period ended
December 31, 1995, as of and for the three-month period ended March 31, 1996, as
of and for the nine-month period ended December 31, 1996 and as of and for the
six month period ended June 30, 1997 (unaudited) and June 30, 1996 (unaudited)
were derived from the Company's consolidated financial statements. The pro forma
data (which are unaudited) are derived from the footnotes to the Company's
consolidated financial statements contained elsewhere in this Information
Statement/Prospectus. The pro forma results are not necessarily indicative of
operating results that would have been achieved had the Acquisition actually
occurred on January 1, 1996. Additionally, the pro forma operating results are
not intended to be a projection of results of future operations. The selected
financial and operating data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements, pro forma financial statements and related notes
included elsewhere herein. For the purpose of comparing the six months ended
June 30, 1997 to the six months ended June 30, 1996, the three months ended
March 31, 1996 has been combined with the three months ended June 30, 1996. As a
result of the Acquisition the six months ended June 30, 1997 includes $576,000
of additional amortization expense as compared to the six months ended June 30,
1996. For purposes of comparing the six months ended June 30, 1997 and 1996, no
other income statement amounts have been impacted by the Acquisition.
Additionally, the three months ended June 30, 1996 includes $576,000 of
additional amortization expense compared to the three months ended March 31,
1996.

4
<PAGE> 10

SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THE COMPANY WMF HOLDINGS LTD. AND SUBSIDIARIES
---------------------------------------------------- ------------------------------------------------------------
6 MONTHS 6 MONTHS 9 MONTHS 3 MONTHS
ENDED ENDED PRO FORMA ENDED ENDED YEAR ENDED DECEMBER 31,
JUNE 30, JUNE 30, DECEMBER 31, DECEMBER 31, MARCH 31, ------------------------------------------------
1997 1996 1996(1) 1996 1996 1995 1994 1993 1992
----------- ----------- ------------ ------------ ---------- ---------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME
STATEMENT
DATA
Revenues..... $ 16,540 $ 14,098 $ 30,301 $ 23,473 $ 6,828 $ 21,999 $ 17,061 $ 16,271 $ 10,655
Expenses..... 16,089 13,371 29,416 22,318 6,523 21,222 17,223 15,550 10,612
Net income
(loss)...... 451 727 885 1,155 305 777 (162) 721 43
Net income
(loss) per
share (2)... .11 .17 0.21 0.27 0.07 0.16 (0.03) 0.12 0.01
Weighted
average
shares
outstanding
(2)......... 4,217,478 4,217,478 4,217,478 4,217,478 4,217,478 4,717,312 6,216,812 6,216,812 6,216,812
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, JUNE 30, DECEMBER 31, MARCH 31, ------------------------------------------------
1997 1996 1996 1996 1995 1994 1993 1992
----------- ----------- ------------ ---------- ---------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET
DATA
Mortgage
loans held
for sale.... $ 21,646 $ 45,880 $ 40,263 $ 23,116 $ 32,462 $ 5,110 $ 44,738 $ 32,401
Servicing
rights...... 22,921 21,961 22,460 8,477 8,466 8,100 7,150 8,319
Total
assets...... 74,055 90,297 88,097 48,976 57,176 31,689 65,347 50,233
Total debt
(3)......... 26,832 53,768 46,136 34,108 43,304 15,271 51,652 39,059
Shareholder's
equity...... 22,979 21,752 22,528 4,324 4,018 6,241 6,403 5,682
OTHER DATA
Cash Flows
from:
Operating
activities
(4)....... $ 3,001 $ 477 $ 11,520 $ 10,701 $ 819 $ 4,981 $ 1,244 $ (7,648) $ (21,866)
Investing
activities
(4)....... (3,040) (6,238) (9,624) (9,276) (548) (2,343) (3,062) (1,737) (5,023)
Financing
activities
(4)....... (268) 3,573 (292) (260) (32) (45) 2,664 11,071 26,880
EBITDA (5)... 4,450 4,085 8,256 6,502 1,754 4,743 2,497 3,481 1,829
</TABLE>

- ---------------

(1) Adjusted to reflect results of operations for the twelve months ended
December 31, 1996, as if the acquisition had occurred January 1, 1996.
Adjustments include all income amounts for the three months ended March 31,
1996 and additional amortization of $575,647.

(2) Gives retroactive effect to a 789.94 per share stock split effective on
October 3, 1997.

(3) Includes $5,000,000 of notes to the Company's former shareholder as of March
31, 1996 and December 31, 1995, and $2,000,000 of notes to the Company's
former shareholder as of December 31, 1994 and 1993 all of which were repaid
in conjunction with the Acquisition.

(4) Operating, investing and financing cash flow represents the amount of cash
generated from operating, investing and financing activities, respectively,
as determined using generally accepted accounting principles ("GAAP").

(5) EBITDA is a non-GAAP presentation of the Company's performance and consists
of income from operations before non-warehouse interest expense, income
taxes, depreciation and amortization. EBITDA is included because it is used
in the industry as a measure of a company's operating performance and
provides information in addition to that supplied by GAAP-based data
regarding the ability of the Company's business to generate cash, but should
not be construed as an alternative either (i) to income from operations
(determined in accordance with GAAP) as a measure of profitability or (ii)
to cash flows from operating activities (determined in accordance with
GAAP). EBITDA does not take into account the Company's debt service
requirements and other commitments and, accordingly, is not necessarily
indicative of amounts that may be available for discretionary uses and
EBITDA as measured by the Company may not be comparable to EBITDA as
measured by other companies.

5
<PAGE> 11

RISK FACTORS

An investment in the Company Common Stock involves certain risks, including
those described below, which can adversely affect the value of the Company
Common Stock. Neither NHP nor the Company makes, nor is any other person
authorized to make, any representation as to the future market value of the
Company Common Stock.

ABSENCE OF PRIOR TRADING MARKET AND POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the date of this Information Statement/Prospectus and until the
Share Distribution, the Company has been and will be a part of NHP and there has
been no trading market for the Company Common Stock. Although there was an
active trading market for NHP Common Stock, the Company is unable to predict the
extent of the market for the Company Common Stock or the prices at which such
shares will trade. The price at which the Company Common Stock trades will be
determined by the marketplace and may be influenced by many factors, including,
among others, the number of shares available in the market, the trading volume
of the Company Common Stock, investor perception of the Company and of the
business and general economic and market conditions. The prices at which the
Company Common Stock trades may fluctuate broadly.

Although the Company has applied for the Company Common Stock to be quoted
on the Nasdaq Stock Market, there can be no assurance that the application will
be granted or, if granted, that the Company will continue to meet the
requirements for the quotation of the Company Common Stock on the Nasdaq Stock
Market. Regardless of whether the Company Common Stock is quoted on the Nasdaq
Stock Market or trades in the over-the-counter market with quotations being
published in the OTC Bulletin Board and the NQB Pink Sheets, there can be no
assurance that an effective trading market will develop or, if one does develop,
that it will be maintained, nor can there be any assurance as to the prices at
which the Company Common Stock will trade following the Share Distribution.

A "when-issued" trading market in the Company Common Stock may develop on
or about the effective date of the registration statement of which this
Information Statement/Prospectus is a part. The existence of such a market means
that shares can be traded prior to the time certificates are actually available
or issued. Whether or not there is a "when-issued" market prior to the
availability of certificates, until an orderly market for the Company Common
Stock develops, the prices at which shares of such stock will trade may be
affected by an imbalance of supply and demand.

NEED FOR ADDITIONAL CAPITAL

General. The Company's ability to execute its strategy depends to a
significant degree on its ability to incur indebtedness and obtain equity
capital. Prior to the Share Distribution, the Company had access to the
resources of NHP including NHP's cash flow, borrowings under NHP's credit
facility and NHP's access to the debt and equity markets. For example, in 1996
and 1997, the Company obtained from NHP financing totalling approximately $8
million for two acquisitions. Following the Share Distribution, the Company will
have to rely on its own resources to obtain capital. Through existing lines of
credit which the Company expects will remain available for the foreseeable
future following the Share Distribution, the Company has access to sufficient
capital to repay amounts provided by NHP in connection with recent acquisitions,
carry on its existing level of business and complete some additional
acquisitions, but may need additional capital to complete further acquisitions
or acquisitions of significant size. Other than as described in "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources," which describes the material
terms, maturities and covenants for its existing debt obligations, the Company
has no commitments for additional borrowings or sales of equity capital and
there can be no assurance that the Company will be successful in consummating
any future financing transactions on terms satisfactory to the Company, if at
all. Factors which could affect the Company's access to the capital markets, or
the costs of such capital, include changes in interest rates, general economic
conditions and the perception in the capital markets of the Company's business,
results of operations, leverage, financial condition and business prospects.
Each of these factors is to a large extent subject to economic, financial,
competitive and

6
<PAGE> 12

other factors beyond the Company's control. In addition, covenants under the
Company's future debt securities and credit facilities may significantly
restrict the Company's ability to incur additional indebtedness and to issue
preferred stock. As of June 30, 1997, these covenants would have limited the
Company to incurring additional indebtedness of approximately $35.2 million. The
Company's ability to repay its outstanding indebtedness at maturity may depend
on its ability to refinance such indebtedness, which could be adversely affected
if the Company does not have access to the capital markets for the sale of
additional debt or equity securities through public offerings or private
placements on terms reasonably satisfactory to the Company.

Dependence on Warehouse Financing. The Company's mortgage lending business
depends upon warehouse facilities with financial institutions or institutional
lenders to finance the Company's temporary holding of loans between loan closing
and mortgage investor funding. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources." Implementation of the Company's growth strategy requires continued
availability of warehouse facilities and may require increases in the capacity
of warehouse facilities. The present warehouse facilities, which had an
aggregate capacity of $185.0 million (of which $164.1 million was unused) as of
June 30, 1997 expire within one year. Although the Company has successfully
renewed its warehouse credit agreements in the past, there can be no assurance
that such financing will be available on terms reasonably satisfactory to the
Company. The inability of the Company to arrange additional warehouse facilities
or to extend or replace existing facilities when they expire would impair the
Company's ability to generate revenue through the origination of mortgages or
the servicing of mortgages originated and sold.

RISKS OF INABILITY TO COMPLETE OR SUCCESSFULLY INTEGRATE ACQUISITIONS OR ENTER
INTO NEW BUSINESS LINES

The Company has implemented a strategy of expanding its business both
internally and through acquisitions of other mortgage originating and servicing
companies and intends to continue to seek additional acquisition candidates. In
addition, the Company is increasing its presence in origination and servicing of
commercial mortgages other than mortgages on multifamily properties, which had
traditionally been the focus of the Company's business. See
"Business -- Strategic Objectives." The process of integrating acquired
businesses with differing markets, customer bases, financial products, systems
and managements into the Company's operations may result in unforeseen
difficulties and may require a disproportionate amount of management's attention
and the Company's resources. These difficulties may be particularly acute in
connection with the Company's expansion into business lines outside of its
traditional multifamily business. Originating and servicing commercial mortgages
may be more difficult than originating and servicing multifamily mortgages in a
number of respects including the following: (i) the Company must develop new
borrower, correspondent and investor relationships; (ii) the commercial mortgage
segment consists of many different asset types, such as office buildings, retail
facilities and hotels, with varying operating characteristics, whereas the
multifamily mortgage segment is more uniform with respect to asset types; and
(iii) unlike the multifamily segment, liquidity in the commercial segment does
not benefit from the involvement of GSEs and the FHA. The Company's ability to
support, manage and control continued growth is dependent upon, among other
things, its ability to hire, train, retain, supervise and manage its workforce
and to continue to develop the skills necessary for the Company to compete
successfully in its new business lines. In particular, the success of certain
acquisitions may be dependent upon the Company's ability to retain and motivate
key employees of the acquired business. No assurance can be given that the
Company will successfully meet all of these challenges. Nor can assurance be
given that additional suitable acquisition candidates can be identified,
financed and purchased on acceptable terms, or that future acquisitions, if
completed, will be successful. If the Company is unable to successfully complete
additional acquisitions, earnings per share or cash flow may be adversely
affected and the market value of the Company's shares may decline.

RELATIONSHIP WITH NHP; POTENTIAL CONFLICTS OF INTEREST

From April 1, 1996 until the Maturity Time, the Company has operated as a
subsidiary of NHP. On or before the Maturity Time, the Company and NHP will
enter into the Separation Agreement. See "Arrangements Between NHP and the
Company After the Share Distribution." This agreement is expected

7
<PAGE> 13

to provide, among other things, for NHP and the Company to indemnify each other
from tax and other liabilities relating to their respective businesses prior to
and following the Share Distribution. The terms of the agreement that will
govern the relationship between the Company and NHP will be established by NHP
in consultation with the Company's management prior to the Share Distribution
while the Company is a wholly-owned subsidiary of NHP. The terms of the
agreement may not be the same as they would be if the agreement were the result
of arms'-length negotiations. Accordingly, there can be no assurance that the
terms and conditions of the agreement will not be more or less favorable to the
Company than those that might have been obtained from unaffiliated third
parties. Adverse developments or material disputes with NHP following the Share
Distribution could have a material adverse effect on the Company.

CONTROL BY MAJORITY STOCKHOLDERS

After the Share Distribution, Demeter (a solely controlled affiliate of the
President and Fellows of Harvard College) will own approximately 38.4 percent of
the outstanding Company Common Stock. See "Principal Stockholders of the
Company." In addition, Capricorn will hold approximately 8.6 percent of the
outstanding Company Common Stock, but the Company understands that Capricorn
intends to distribute these shares to its partners in the Capricorn
Distribution. Capricorn's partners include Phemus Corporation ("Phemus"), an
affiliate of Demeter, which has a 20 percent interest in Capricorn. Capricorn
Investors II, L.P. ("Capricorn II"), whose general partner is managed by the
person who controls the general partner of Capricorn, has entered into a
commitment pursuant to which it would, following the negotiation and execution
of definitive documentation and subject to the satisfaction of the conditions
that will be specified therein, acquire additional shares of the Company, as a
result of which it would hold approximately 11.2 percent of the issued and
outstanding shares of the Company. Messrs. Eisenson and Palmer, directors of the
Company, are officers of Demeter and Phemus, and Mr. Winokur, who is expected to
be a director of the Company as of or shortly after the Share Distribution,
controls the managing general partner of Capricorn and is the manager of the
general partner of Capricorn II. In addition, Phemus owns limited partnership
interests in Capricorn and Capricorn II, and Mr. Winokur is a member of the
board of directors of Harvard Management Company, Inc., an affiliate of Demeter
and Phemus. If Capricorn II were to complete the proposed investment, then
Demeter and Capricorn II would together have the requisite votes to elect all
the Company's directors and to approve or disapprove stockholder matters with
respect to the affairs and policies of the Company that are determined by
majority votes of the stockholders of the Company. Furthermore, because of their
shareholdings, Demeter and Capricorn II will likely have the ability to cause or
prevent a sale of the Company or other transaction resulting in a change of
control even if such a transaction is in the interest of other stockholders.
Moreover, given the size of its holding, Demeter may exercise effective control
over such matters on its own.

RISK OF LOSS ON MORTGAGE LOANS SOLD UNDER DUS PROGRAM

The Company is an approved lender under the Federal National Mortgage
Association's ("Fannie Mae") Delegated Underwriting and Servicing ("DUS")
Program. Under this program, the Company originates, places and services
multifamily loans for Fannie Mae without having to obtain Fannie Mae's prior
approval for each loan. This program requires the Company to share the risk of
loss by paying a portion of the losses on mortgages it originates under the
program, up to 20 percent of the original principal balance of the loan.
Additionally, changes in the Company's estimates of defaults under the DUS
Program could materially impact the value of rights to service. See "Possible
Loss of Value from Impairment of Mortgage Servicing Rights." The Company is
required to maintain a letter of credit or cash balances sufficient to cover a
probability based assessment of its portion of any such losses. As of June 30,
1997, the unpaid principal balance of loans placed in the DUS Program by the
Company totaled $815.0 million (out of a total of $7.5 billion principal balance
of all loans serviced by the Company). As of June 30, 1997, the Company had a
reserve to provide for future loan losses under the DUS Program of $4.8 million
and a $4.4 million letter of credit to secure losses under the program. While
the Company believes that this reserve is sufficient, actual loan losses under
the DUS Program could exceed this reserve and could have a materially adverse
effect on the Company's performance, which in turn may adversely affect the
price of WMF Common Stock.

8
<PAGE> 14

RETAINED RISKS OF MORTGAGE LOANS SOLD

In connection with the Company's origination and sale of certain mortgage
loans, the Company must make certain representations and warranties concerning
mortgages originated by the Company and sold to mortgage investors. These
representations and warranties cover such matters as title to mortgaged
property, lien priority, environmental reviews and certain other matters. The
Company's representations and warranties rely in part on similar representations
and warranties made by the borrower or others. The Company would have a claim
against the borrower or another party in the event of a breach of any
representations or warranties that are made by the borrower or others; however,
the Company's ability to recover on any such claim would be dependent upon the
financial condition of the party against which such claim is asserted. In
addition, the Company makes some representations and warranties even though it
does not receive similar representations and warranties from borrowers or
others, and the Company is not entitled to indemnity with respect to violations
of such representations and warranties. There can be no assurance that the
Company will not experience a material loss as a result of representations and
warranties it makes, which loss may in turn adversely affect the Company
operations.

RISKS OF LOSS FROM CHANGES IN GENERAL ECONOMIC CONDITIONS

Periods of economic slowdown or recession, rising interest rates or
declining demand for real estate could adversely affect the Company's business.
See "Business -- Interest Rate Sensitivity." In particular, an economic slowdown
will generally reduce the Company's origination and sales of mortgages, which
generated approximately half of the Company's revenue in 1996. In addition,
periods of economic slowdown or recession, whether general, regional or
industry-related, may increase the risk of default on multifamily and commercial
mortgage loans, which may also have an adverse effect on the Company's business,
financial condition and results of operations. The Company may experience losses
as a result of reduced servicing fees from mortgages that are foreclosed and may
experience losses from non-payment on mortgages in the DUS Program described
under "-- Risk of Loss on Mortgage Loans Sold Under DUS Program." Such periods
also may be accompanied by decreased demand for multifamily or commercial
properties, resulting in declining values of properties securing outstanding
loans, thereby weakening collateral coverage and increasing the possibility of
losses in the event of default. Significant increases in properties for sale
during recessionary economic periods may depress the prices at which foreclosed
properties may be sold or delay the timing of such sales. There can be no
assurance that the multifamily or commercial markets will be adequate for the
sale of foreclosed properties and any material deterioration of such markets
could reduce recoveries from the sale of repossession inventory.

Changes in the relationship between short-term and long-term interest rates
could also affect the Company's results of operations, which in turn could
affect the Company's outstanding securities. The Company earns net interest
income, typically based upon long-term rates earned on loans net of the
short-term borrowing costs to finance such loans, on loans held between loan
closing and mortgage investor funding. During 1996 and the six months ended June
30, 1997, net interest income amounted to 9.8 percent and 9.9 percent,
respectively, of total revenue of the Company. If long-term interest rates
decreased relative to short-term interest rates, the Company's net interest
income would, under certain circumstances, decline and could, under certain
circumstances, become a net interest expense. Additionally, decreases in
short-term interest rates would reduce the Company's income from placement fees.

POSSIBLE LOSS OF VALUE FROM IMPAIRMENT OF MORTGAGE SERVICING RIGHTS

Pursuant to generally accepted accounting principles ("GAAP") mortgage
banking firms are required to recognize as a separate asset the right to service
mortgage loans, whether those rights are retained upon sale of mortgages
originated by the firm or acquired by purchase, if it is practicable to
determine the fair value of the servicing rights. Accordingly, upon origination
and sale of a mortgage and to the extent that it is practicable to determine the
fair value of the servicing rights, the Company is required to recognize income
equal to the value of the retained rights, and to amortize the value of the
rights over the life of the retained rights. See "Management's Discussion and
Analysis of Financial Conditions and Results of Operations -- New Accounting
Standards." The value of this asset is evaluated for impairment based on the
excess of the carrying amount

9
<PAGE> 15

of the mortgage servicing rights over their fair value. The fair value may be
affected by various factors including changes in mortgage prepayments (which
tend to increase as prevailing long-term interest rates decline and decrease as
such interest rates rise), higher than expected loan defaults, lower than
expected short-term interest rates, and other factors which impact the net cash
flow generated from such servicing rights. Other key factors that impact the
estimated fair value of commercial and multifamily mortgage servicing rights
include prepayment penalty terms (including lockout and yield maintenance
requirements), the underlying loans' average custodial balances and short-term
interest rates. The Company's operating results will be adversely affected to
the extent that impairment occurs, which in turn may affect the price of Company
Common Stock. Although the Company has not recorded any impairment in 1995, 1996
and through June 30, 1997, it may record impairment at any time in the future.
No assurance can be given that the factors that cause impairment will
approximate the Company's estimates or that such capitalized mortgage servicing
rights could be sold at their stated value, if at all.

RISK OF LOSS OF CERTAIN ADVANCED FUNDS

When borrowers are delinquent in making monthly payments on multifamily and
commercial mortgage loans serviced by the Company, the Company may be required
to advance interest payments with respect to such delinquent loans to the extent
that the Company deems such advances ultimately recoverable. In addition, the
Company may be required to advance funds for the payment of real estate taxes
and insurance. At June 30, 1997, the Company had made principal, interest and
other servicing advances of $2.3 million. These advances require funding from
the Company's capital resources but have priority of repayment to the Company
from collections or recoveries on the loans. The Company would incur expenses,
which may be material, if the full amount of these advances is not repaid.

LOSSES UPON TERMINATION OF CERTAIN SERVICING CONTRACTS

Mortgage servicing contracts covering approximately $1.5 billion or 20
percent of the principal balance of mortgages serviced by the Company (as of
June 30, 1997) are terminable upon 30 days notice by the holder of the serviced
mortgage. These contracts are generally for the servicing of mortgages held by
insurance companies. The percentage of mortgages covered by contracts with such
termination provisions may increase to the extent the Company increases its
servicing of mortgages held by insurance companies. The remainder of the
Company's mortgages are for a term equal to the life of the mortgage and are
terminable by the holder of the mortgage only for cause, upon payment to the
Company of a termination fee or upon prepayment or other early termination of
the mortgage. Termination of a significant amount of these mortgage servicing
contracts could have an adverse effect on the Company's operations to the extent
the Company could not adequately replace the contracts with new contracts.

UNCERTAINTIES RESULTING FROM GOVERNMENT REGULATION AND CHANGES IN GOVERNMENTAL
PROGRAMS

The operations of the Company are subject to regulation by federal, state
and local government authorities (such as the FHA and the Government National
Mortgage Association ("Ginnie Mae")), various laws and judicial and
administrative decisions, and regulations of government sponsored entities (such
as Fannie Mae) that purchase mortgages originated and/or serviced by the
Company. See "Business -- Regulation." These laws, regulations and decisions
require the Company, among other things, to maintain a minimum net worth and
minimum lines of credit, to submit financial reports, and to maintain a quality
control plan for the underwriting, origination and servicing of loans. These
laws and regulations also impose requirements and restrictions affecting, among
other things, the Company's loan originations, credit activities, maximum
interest rates, finance and other charges, disclosures to customers, the terms
of secured transactions, collection, repossession and claims handling
procedures, personnel qualifications, and other trade practices. Although the
Company believes that it is in compliance in all material respects with
applicable local, state and federal laws, rules and regulations and with the
requirements of entities purchasing mortgages, there can be no assurance that
more restrictive laws, rules, regulations or requirements will not be adopted in
the future that could make compliance more difficult or expensive, restrict the
Company's ability to originate, purchase, sell or service loans, further limit
or restrict the amount of interest and other charges earned on loans

10
<PAGE> 16

originated or purchased by the Company, further limit or restrict the terms of
loan agreements, or otherwise adversely affect the business or prospects of the
Company. If the Company were unable to comply with these regulations, or were
found to be in violation of the regulations, the Company could lose the
opportunity to originate, sell or service mortgages in certain jurisdictions or
to originate mortgages on behalf of, sell mortgages to or service mortgages held
by certain institutions. The inability to originate, sell or service mortgages
with respect to a participating jurisdiction or a particular entity could have a
material adverse effect on the Company.

Approximately 44.8 percent of loans originated by the Company in 1996 and
approximately 53.1 percent of loans serviced by the Company as of December 31,
1996 were insured by the FHA. A change in the law governing FHA programs,
regulations relating to those programs or other changes to the programs could
affect the availability of, or the ability of the Company to originate or
service, FHA-insured mortgages. Any such change could therefore have a material
adverse effect on the Company and its results of operations.

The Company must obtain the prior consent of Fannie Mae and the State of
Arizona prior to a change in control of the Company, which may include the Share
Distribution. The Company has no reason to believe that any such consents
required in connection with the Share Distribution will not be granted. If the
Company failed to receive any such consents, it would lose the net income (if
any) generated by loans originated in or held by any of these entities.

RISKS OF SECURITIZATION

The Company has historically received commitments from third-party mortgage
investors to purchase loans at predetermined prices prior to origination. In the
future, the Company may decide to securitize mortgage loans by pooling and
subsequently selling them in the secondary market without pre-existing investor
purchase commitments. Adverse changes in interest rates, the secondary market or
in the assets securing the mortgages could impair the Company's ability to sell
these loans on profitable terms or on a timely basis. Any such impairment could
have a material adverse effect upon the Company's business and results of
operations.

RISK OF HEDGING TRANSACTIONS

The Company has entered into hedging arrangements on a limited basis to
reduce the effects of interest rate movements, and may in the future enter into
additional arrangements particularly if the Company increases its securitization
of mortgage loans. See "Risk of Loss from Changes in General Economic
Conditions." The instruments entered into to date have been swap contracts, and
future arrangements may also include futures contracts and the short sale of
financial instruments such as U.S. Treasury bonds. Such transactions may be used
for other purposes, including managing the effect of interest rate changes on
lines of credit with variable interest rates and on the value of uncommitted
loans held for sale (to the extent the Company elects to hold such loans). The
Company intends to use hedging instruments to manage risk, and not for
speculative purposes. Such transactions could nevertheless cause the Company to
recognize losses depending on the terms of the instrument, the performance by
counter-parties and actual interest rate movements.

RELIANCE ON KEY PERSONNEL

The Company is dependent upon the efforts and abilities of a number of its
current key management, including J. Roderick Heller, III, the Company's
Chairman, and Shekar Narasimhan, the Company's President and Chief Executive
Officer. The success of the Company depends to a large extent upon its ability
to retain and continue to attract key employees through its compensation plans,
including employee stock options. The loss of certain of these employees or the
Company's inability to retain or attract key employees in the future could have
an adverse effect upon the Company's operations.

11
<PAGE> 17

DEPENDENCE ON SALES STAFF

The Company is dependent upon the efforts and abilities of its twenty-eight
person sales staff. The success of the Company depends to a large extent upon
its ability to retain and continue to attract sales personnel through its
compensation policies, including commission arrangements and its employee stock
option plan. If sales staff responsible for a significant portion of the
Company's annual loan origination volume were to terminate their employment with
the Company for any reason, the Company's loan origination volume, and thus its
operating results, could be adversely affected.

COMPETITION

The Company operates throughout the United States and it faces different
levels of competition in various individual markets. Generally, competition is
fragmented with very few national competitors, and many local and regional
competitors. The profile and business practices of competitors may change,
however, because the multifamily and commercial mortgage industry is undergoing
a period of consolidation. Certain of the Company's competitors are larger and
have greater financial resources, including greater access to and lower cost of
capital, than the Company. In addition, the Company's business is characterized
by low barriers to entry, and new competitors have recently been successful in
raising the capital necessary to enter the business. An increase in competition
in markets in which the Company has significant operations could reduce the
level of loan origination or the amount of servicing the Company obtains or
retains and could reduce the fees the Company is able to charge.

NO ANTICIPATED STOCKHOLDER DISTRIBUTIONS

It is not anticipated that the Company will pay cash dividends on Company
Common Stock in the foreseeable future. The decision whether to apply legally
available funds to the payment of dividends on the Company Common Stock will be
made by the Board of Directors of the Company from time to time in exercise of
its business judgment, taking into account, among other things, the Company's
results of operations and financial condition, any then existing or proposed
commitments by the Company for the use of available funds, and the Company's
obligations with respect to the holders of any then outstanding indebtedness or
preferred stock. The Company's ability to pay dividends may be restricted from
time to time by financial covenants in its credit agreements or in arrangements
with or regulations of government sponsored entities.

SUBSTANTIAL NUMBER OF SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of Company Common Stock in the public market
following the Share Distribution could have an adverse effect on the market
price of the Common Stock. Of the approximately 4.8 million shares to be
outstanding after the Share Distribution and the Capricorn Transaction (as
defined below), approximately 2.9 million shares will be held by Demeter,
Capricorn (prior to any distribution of shares to its partners) and Capricorn
II. These shares will be subject to sale either without restriction or subject
to the volume limitations of Rule 144 under the Securities Act of 1933, as
amended (the "Securities Act"), if Demeter and Capricorn are considered
affiliates of the Company as that term is defined in Rule 144. Sale of a
substantial number of these shares at any time or over time could adversely
affect the market price of the Company Common Stock. The Company expects to
grant to Capricorn II rights to have shares it receives in the Capricorn
Transaction registered for resale by Capricorn II.

ANTI-TAKEOVER PROVISIONS

Although the Company elected not to be subject to the provisions of Section
203 of the Delaware General Corporation Law, as amended ("Section 203") on
October 14, 1997, it may nevertheless be subject to the provisions of Section
203 for up to one year from that date. Under Section 203, a resident domestic
corporation may not engage in a business combination with a person who owns (or
within three years prior, did own) 15% or more of the corporation's outstanding
voting stock (an "interested stockholder") for a period of three years after the
date such person became an interested stockholder, unless (i) prior to such date
the board of directors approved either the business combination or the
transaction which resulted in the

12
<PAGE> 18

stockholder becoming an interested stockholder, (ii) upon consummation of the
transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85 percent of the
corporation's voting stock outstanding at the time the transaction commenced, or
(iii) on or subsequent to such date the business combination is approved by the
board of directors and authorized by the affirmative vote of holders of at least
two-thirds of the outstanding voting stock which is not owned by the interested
stockholder. Section 203 could make a takeover of the Company more difficult or
deter potential purchasers from seeking to acquire the Company. However, the
restrictions under Section 203 would not apply to any business combination with
Capricorn II because the Company's board of directors has approved the
acquisition by Capricorn II of shares of Company Common Stock which, when taken
together with the shares of Company Common Stock expected to be owned by
Capricorn at the closing of such acquisition, exceeds 15 percent of the shares
of Company Common Stock. Additionally, the Company's Certificate of
Incorporation and By-laws allow the Company to issue, without stockholder
approval, preferred stock having voting rights senior to those of the Common
Stock, which could have the effect of making a takeover of the Company more
difficult or deter potential purchasers from seeking to acquire the Company.

13
<PAGE> 19

THE DISTRIBUTION OF COMPANY COMMON STOCK

DESCRIPTION OF THE DISTRIBUTION

The Share Distribution will be made at the earlier of (i) the effective
time of the proposed Merger between NHP and a wholly owned subsidiary of AIMCO
and (ii) December 1, 1997 (such time being referred to as the "Maturity Time")
to holders of Rights on the basis of one-third of a share of Company Common
Stock for each Right. The Share Distribution is conditioned on receipt of all
necessary consents, and therefore may not be completed until consent to the
Share Distribution is received from the lenders under NHP's bank credit
facility. Accordingly, if this consent is not received prior to the earlier of
the effective time of the Merger or December 1, 1997, the Maturity Time will be
deferred until the consent is received. NHP does not currently expect this
consent to be received until the effective time of the Merger, and therefore
expects the Share Distribution to occur at the effective time of the Merger,
which is expected to occur the second week of December.

If the Maturity Time is the effective time of the Merger, NHP Stockholders
will receive their shares of Company Common Stock when they exchange their NHP
Common Stock for Class A Common Stock of AIMCO, par value $.01 per share ("AIMCO
Common Stock"). If the Maturity Time is December 1, 1997, NHP Stockholders of
record immediately prior to the Maturity Time will receive certificates
evidencing the shares of Company Common Stock. No certificates or scrip
representing fractional shares of Company Common Stock will be issued. NHP
Stockholders will receive cash in lieu of fractional shares of Company Common
Stock that would otherwise be distributed at a rate of $9.15 per share of
Company Common Stock.

The Rights were issued May 9, 1997 to stockholders of record of NHP Common
Stock on October 1, 1997 on the basis of one Right for each share of NHP Common
Stock. In addition, one Right was attached to and issued with each share of NHP
Common Stock issued after May 2, 1997, and one Right will be issued with each
share of NHP Common Stock issued prior to the Maturity Time. At the close of
business on October 1, 1997, 12,996,939 shares of NHP Common Stock were
outstanding and held of record by 40 holders. NHP believes there are
approximately 400 beneficial owners of shares of NHP Common Stock as of May 9,
1997. If the share distribution occurred on that date, an aggregate of
approximately 4,332,313 shares of Company Common Stock would have been
distributed to such holders. NHP is prohibited by the Rights Agreement and the
Merger Agreement from issuing additional shares of NHP Common Stock, except in
connection with the exercise of outstanding stock options. On October 1, 1997,
options to acquire 811,250 shares of NHP Common Stock were issued and
outstanding and immediately exercisable. If all such options were exercised
before the Maturity Time, an additional 270,417 shares of Company Common Stock
would be distributed.

AIMCO has agreed to hold all Rights distributed with respect to shares of
NHP Common Stock that it acquires pursuant to the Stock Purchase Agreement in
trust for Demeter and Capricorn and certain assignees of Capricorn. AIMCO has
agreed to deliver to Demeter and Capricorn and certain assignees of Capricorn
the shares of Company Common Stock AIMCO would be entitled to receive in the
Share Distribution.

Capricorn II has entered into a commitment pursuant to which it would,
following the negotiation and execution of definitive documentation and subject
to the satisfaction of the conditions that will be specified therein, purchase
546,448 shares of Company Common Stock at the time of the Share Distribution for
a price of $9.15 per share (the "Capricorn Transaction"). The Company also
expects to issue at a nominal purchase price pursuant to the terms and
conditions of an Employee Stock Purchase Plan (the "ESPP") it intends to adopt
prior to the Share Distribution, 25 shares of Company Common Stock to each
employee of the Company who is not eligible for participation in a Key Employee
Incentive Plan ("KEIP") the Company also intends to adopt. In addition, the ESPP
is expected to provide that each employee (including those participating in the
KEIP) will have an option to acquire up to 1,000 shares of Company Common Stock
for a price of $9.15 per share, which option shall be exercisable for 10
business days commencing upon effectiveness of an appropriate registration
statement under the Securities Act. The Company expects that up to 400,000
shares may be issued pursuant to the ESPP. The Company may loan employees funds
to purchase shares under the ESPP.

In connection with the Rights Distribution, Demeter and Capricorn have
agreed that they will not, for a period ending April 1, 1998, purchase any
shares of Common Stock at a price of less than $9.15 per share and

14
<PAGE> 20

that, except in certain situations, for a period of one year following the Share
Distribution, they will not sell, in one or more related transactions, more than
50 percent of the shares held by them at the Maturity Time without requiring the
purchaser of the shares to offer to purchase the shares of all holders of the
Company's Common Stock or propose a merger, each on terms comparable to those on
which Demeter or Capricorn sells. In addition, Capricorn II has agreed that, if
the Capricorn Transaction is completed, for a period of 90 days following the
Share Distribution, it will not purchase any shares of Company Common Stock on
the open market unless it has been notified by the Company that the Company will
not be buying any shares of Company Common Stock in open market transactions.
Capricorn II has also agreed that, if during the period of one year following
the Share Distribution it (together with its affiliates, which shall not include
Capricorn for this purpose) is the single largest shareholder of the Company and
holds more than 20% of the shares of the Company, it will not sell, in one or
more related transactions, more than 50 percent of the shares held by it at the
time of the sale without requiring the purchaser of the shares to offer to
purchase the shares of all holders of the Company's Common Stock on terms
comparable to those on which Capricorn II sells.

EXPENSES OF THE DISTRIBUTION

It is estimated that the direct legal, financial advisory, accounting,
printing, mailing and other expenses (including the fees of NHP's and the
Company's transfer agents) will total approximately $675,000, and will be borne
by NHP. These expenses do not include any of the costs associated with the time
spent by NHP's and the Company's officers and legal, accounting and other
personnel in connection with the Distribution or other internal costs of NHP or
the Company. Upon request, NHP will pay the reasonable expenses of brokerage
firms, custodians, nominees and fiduciaries who are record holders of NHP Common
Stock for forwarding this Information Statement/Prospectus to the beneficial
owners of such shares.

REASONS FOR THE DISTRIBUTION

AIMCO, Merger Sub and NHP have entered into an Agreement and Plan of
Merger, dated as of April 21, 1997 (the "Merger Agreement") pursuant to which
Merger Sub will, subject to the terms and conditions provided in the Merger
Agreement, merge with and into NHP (the "Merger"), thereby making NHP, as the
surviving corporation, a wholly-owned subsidiary of AIMCO (the "Surviving
Corporation"). In addition, AIMCO and AIMCO/NHP Holdings, Inc., a Delaware
corporation and an unconsolidated subsidiary of AIMCO ("ANHI") have purchased
approximately 53.4 percent of the outstanding shares of NHP Common Stock
pursuant to the Stock Purchase Agreement among AIMCO, Demeter and Capricorn.
AIMCO required that the Rights Distribution occur as a condition to the Merger
and its purchase of shares of NHP Common Stock, and NHP believes that completion
of the Merger while allowing current NHP Stockholders the opportunity to retain
an interest in the business of the Company maximizes the value that NHP
Stockholders will receive in connection with the Merger. In addition, even if
NHP were not merged with AIMCO, NHP believes that the Share Distribution, and
the Company's subsequent status as a public company, will allow investors to
evaluate better the merits and outlook of the Company's business. The Share
Distribution would also give NHP Stockholders and other potential investors the
flexibility to direct their investment to their specific area of interest,
property management or financial services, or to continue to retain an interest
in both areas.

FEDERAL INCOME TAX CONSEQUENCES OF THE RIGHTS DISTRIBUTION AND THE MATURITY OF
THE RIGHTS

The following discussion summarizes the material United States federal
income tax consequences of the Rights Distribution by NHP to NHP Stockholders
and the maturity of the Rights. Wilmer, Cutler & Pickering, which has acted as
tax counsel to NHP in connection with the preparation and filing of the
registration statement of which this Information Statement/Prospectus is a part,
has provided its opinion (which is filed as an exhibit to the Registration
Statement) with respect to the legal conclusions set forth herein. The opinion
of Wilmer, Cutler & Pickering is qualified in its entirety by assumptions and
qualifications set forth therein. The summary is based on the Internal Revenue
Code of 1986, as amended (the "Code"), and regulations, rulings, and judicial
decisions as of the date hereof, all of which may be repealed, revoked or
modified so as to result in federal income tax consequences different from those
described below. Such changes could be applied retroactively in a manner that
could adversely affect an NHP Stockholder. In

15
<PAGE> 21

addition, the authorities on which this summary is based are subject to various
interpretations. It is therefore possible that the federal income tax treatment
of the distribution, holding, and disposition of the Rights and the Company
Common Stock may differ from the treatment described below.

This summary applies only to NHP Stockholders who own NHP Common Stock held
as a capital asset, and does not deal with special situations, such as those of
dealers in securities or currencies, financial institutions, insurance
companies, persons holding the Company Common Stock as part of a hedging or
conversion transaction or a straddle, persons whose "functional currency" is not
the U.S. dollar, foreign investors, and certain U.S. expatriates.

This summary is for general information only. It does not address all
aspects of U.S. federal income taxation that may be relevant to holders of NHP
Common Stock in light of their particular circumstances, nor does it address any
tax consequences arising under the laws of any state, local, or foreign taxing
jurisdiction. NHP Stockholders should consult their tax advisors about the
particular United States federal income tax consequences to them of the Rights
Distribution, the maturity of the Rights, or the holding and disposition of the
Company Common Stock, as well as any tax consequences arising under the laws of
any state, local, or foreign taxing jurisdiction.

Effect of the Rights Distribution and Maturity of the Rights on NHP

NHP will recognize gain for federal income tax purposes as a result of the
Rights Distribution combined with the later maturity of the Rights. The amount
of gain recognized by NHP will be the excess of the fair market value of the
Company Common Stock over NHP's tax basis in the Company Common Stock. NHP's tax
basis in the Company Common Stock as of December 31, 1996 was approximately
$23,400,000, and is subject to further adjustment reflecting the Company's 1997
earnings and distributions. The gain so recognized will be a capital gain, and
will be added to the regular taxable income and the alternative minimum taxable
income of NHP for the taxable year in which the Rights Distribution occurs. NHP
does not expect to have sufficient alternative minimum tax net operating losses
available to offset such gain, so that the 20 percent federal alternative
minimum tax will likely apply to most or all of such gain. NHP does expect to
have regular federal income tax net operating losses available in a sufficient
amount to offset such gain under the regular federal income tax, although the
amount of available loss carryovers has not been finally determined. In the
event that the fair market value of the Company is less than NHP's tax basis,
NHP will not be permitted to claim any loss for federal income tax purposes.

Effect of the Rights Distribution and Maturity of the Rights on NHP
Stockholders

Although the matter is not free from doubt, the Rights Distribution should
be treated for federal income tax purposes as a taxable distribution made on the
Rights Distribution Date to the NHP Stockholders of record on May 2, 1997.
Assuming the Rights Distribution is treated as a taxable event on the Rights
Distribution Date, such distribution will be a dividend to the extent of the
current and accumulated earnings and profits of NHP. NHP will make a
determination of the fair market value, as of the Rights Distribution Date, of
the Company shares covered by the Rights Distribution based on all available
facts and circumstances (including the price at which the Company's stock trades
after the maturity of the Rights), and will report such amount to the NHP
Stockholders as the amount of the distribution. The IRS will not be bound by
NHP's determination of the value of the distribution and may take a different
view, in which event a NHP Stockholder's dividend amount might be different from
the amount reported by NHP.

The portion of the Rights Distribution that will be treated as a dividend
cannot be finally determined until the end of NHP's taxable year that includes
the Rights Distribution. The portion of the Rights Distribution in excess of the
amount treated as a dividend will be treated as a tax free return of basis to
the extent of an NHP Stockholder's basis in NHP Common Stock, and as a capital
gain to the extent such portion exceeds the NHP Stockholder's basis in NHP
Common Stock. For certain noncorporate NHP Stockholders (including individuals),
the rate of taxation of capital gains will depend upon (i) the NHP Stockholder's
holding period in the NHP Common Stock (with preferential rates available for
NHP Common Stock held more than 18 months) and (ii) the NHP Stockholder's
marginal tax rate for ordinary income. NHP Stockholders should

16
<PAGE> 22

consult their tax advisors with respect to applicable rates and holding periods,
and netting rules for capital losses.

An NHP Stockholder's basis in NHP Common Stock will be reduced (but not
below zero) by the portion of the distribution in excess of the amount treated
as a dividend. Any such reduction in basis will generally increase the amount of
gain (or decrease the amount of loss) recognized by the NHP Stockholder upon a
subsequent sale or exchange of NHP Common Stock, including an exchange in the
Merger.

Domestic corporations that satisfy the holding period rules of Internal
Revenue Code section 246(c) with respect to NHP Common Stock, and that receive a
Rights Distribution, will generally be entitled to a 70 percent dividends
received deduction for the dividend portion of the distribution. However, if the
corporation's NHP Common Stock is "debt-financed portfolio stock" for the
purposes of Internal Revenue Code section 246A, the corporation's dividends
received deduction will be reduced to the extent provided by that section. In
addition, the dividend portion of the distribution may be an "extraordinary
dividend" for the purpose of Internal Revenue Code section 1059, which would
require a corporation owning NHP Common Stock for less than 2 years before the
"announcement date" of the Rights Distribution to reduce its basis in its NHP
Common Stock by the nontaxed portion of the dividend. Under a recent amendment
to Section 1059, if the nontaxed portion of the dividend exceeds the
corporation's basis in its NHP Common Stock, the corporation is required to
recognize such excess as taxable gain on the Rights Distribution Date. Domestic
corporations that are NHP Stockholders should consult their tax advisors
concerning these issues.

Assuming the Rights Distribution is treated as a taxable event on the
Rights Distribution Date, (i) an NHP Stockholder will have basis in the Rights
equal to the amount of the Rights Distribution to such stockholder; (ii) the
maturity of the rights should not be a taxable event to NHP Stockholders; and
(iii) an NHP stockholder will have basis in the Company Common Stock equal to
such stockholder's basis in the Rights prior to the maturity of the Rights.

EFFECT ON OUTSTANDING NHP OPTIONS

Certain directors, officers and employees of NHP and its subsidiaries
(including the Company) have been granted options to purchase shares of NHP
Common Stock (the "NHP Options"). The NHP Options have been granted pursuant to
various stock option plans of NHP (the "NHP Plans"). Immediately prior to the
Share Distribution, each NHP Option will be divided into two separately
exercisable options: (i) an option to purchase Company Common Stock (an "Add-on
Company Option"), exercisable for the number of shares of Company Common Stock
that would have been issued in the Share Distribution in respect of the shares
of NHP Common Stock subject to the applicable NHP Option, if such NHP Option had
been exercised in full immediately prior to the Maturity Time, and containing
substantially equivalent terms as the existing NHP Option, and (ii) an option to
purchase NHP Common Stock (the "Adjusted NHP Option"), exercisable for the same
number of shares of NHP Common Stock as the corresponding NHP Option had been.
The per share exercise price of such NHP Option will be allocated between the
Add-on Company Option and the Adjusted NHP Option based on a ratio of the
assumed value of Company Common Stock to the combined value of Company Common
Stock and NHP Common Stock, and all other terms of such NHP Option will remain
the same in all material respects. Adjusted NHP Options held by employees of the
Company who will no longer be employees of NHP after the Share Distribution and
Add-on Company Options held by employees of NHP who are not employees of the
Company will vest at the time of the Share Distribution and will be exercisable
for a period of ninety days following the Share Distribution. In connection with
the Merger, the Adjusted NHP Option will be converted into an option to receive
AIMCO Common Stock, with each option to acquire one share of NHP Common Stock
being converted into an option to acquire .74766 of a share of AIMCO Common
Stock with the exercise price adjusted accordingly.

As a result of the foregoing, certain persons who remain NHP (or AIMCO)
employees or non employee directors after the Share Distribution and certain
persons who were NHP employees prior to the Share Distribution but become
employees of the Company after the Share Distribution will hold both Adjusted
NHP (or AIMCO) Options and separate Add-on Company Options. The obligations with
respect to the

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<PAGE> 23

Adjusted NHP (or AIMCO) Options and Add-on Company Options will be the
obligations of NHP (or AIMCO) and the Company, respectively.

EFFECT OF THE SHARE DISTRIBUTION ON OWNERSHIP OF NHP AND THE COMPANY

As a result of the Share Distribution, NHP's interests in the financial
services business will be owned and operated by a separate publicly held
company. Excluding the effect of the Capricorn Transaction and the Merger, the
NHP Stockholders would own the same interest in each of the Company and NHP that
they held in NHP immediately prior to the Maturity Time, but in the form of
separate securities, NHP Common Stock and Company Common Stock. The transfer
agent and registrar for the Company Common Stock is expected to be BankBoston,
N.A.

Excluding the effect of the Merger, the Share Distribution would not affect
the number of outstanding shares of NHP Common Stock or the rights of any NHP
Stockholder with respect thereto.

RESTRICTIONS ON TRANSFER

Shares of the Company Common Stock distributed to the NHP Stockholders
pursuant to the Share Distribution will be freely transferable under the
Securities Act, except for shares received by any persons who may be deemed to
be "affiliates" of the Company as that term is defined in Rule 144 promulgated
under the Securities Act. Persons who may be deemed to be affiliates of the
Company after the Share Distribution generally include individuals or entities
that control, are controlled by, or are under common control with, the Company
and may include certain officers and directors of the Company as well as
principal stockholders of the Company. Persons who are affiliates of the Company
will be permitted to sell their shares of the Company Common Stock only pursuant
to an effective registration statement under the Securities Act or an exemption
from the registration requirements of the Securities Act. Demeter, Capricorn and
Capricorn II will also be subject to certain restrictions on their sales of
shares as described under "The Distribution of Company Common
Stock -- Description of the Distribution." The Company expects to grant to
Capricorn II rights to have shares it receives in the Capricorn Transaction
registered for resale by Capricorn II.

THE CAPRICORN DISTRIBUTION

After the Share Distribution and before the Capricorn Distribution,
Capricorn will own approximately 8.6 percent of the Company Common Stock.
Herbert S. Winokur, Jr. is expected to serve as a director of the Company as of
or shortly after the Maturity Time. Mr. Winokur is the President of Winokur
Holdings, Inc., which is the managing general partner of Capricorn. After the
Capricorn Distribution, Capricorn will not own any shares of Company Common
Stock.

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<PAGE> 24

ARRANGEMENTS BETWEEN NHP AND
THE COMPANY AFTER THE SHARE DISTRIBUTION

Following the Share Distribution, the Company and NHP (which is currently
owned 53.4 percent by AIMCO and its unconsolidated subsidiaries and which,
following the Merger, will be a wholly-owned subsidiary of AIMCO and its
unconsolidated subsidiaries) will operate independently, and neither will have
any stock ownership, beneficial or otherwise, in the other. For the purposes of
governing certain of the ongoing relationships between the Company and NHP after
the Share Distribution, and to provide mechanisms for an orderly transition, on
or before the Maturity Time, the Company and NHP will enter into a Separation
Agreement (the "Separation Agreement") and Tax Sharing Agreement (the "Tax
Sharing Agreement"). The terms of the Separation Agreement and the Tax Sharing
Agreement have not yet been determined, and pursuant to the Merger Agreement,
the terms must be reasonably acceptable to AIMCO. The Separation Agreement and
the Tax Sharing Agreement will be agreed to while the Company is a wholly-owned
subsidiary of NHP and therefore the terms may not be the same as they would be
if the agreements were the result of arms'-length negotiations between
independent parties. See "Risk Factors -- Relationship With NHP; Potential
Conflicts of Interest."

Although the terms of the Separation Agreement are not expected to be
determined until shortly before the date of the Share Distribution, the Company
currently expects that the terms will include the following. There can be no
assurance that the terms of the Separation Agreement will not be less favorable
to the stockholders of the Company than the terms set out below.

Indemnification. The Separation Agreement is expected to provide for cross
indemnification designed to place with the Company the responsibility for
liabilities of the business carried on by the Company prior to the Share
Distribution and place on NHP responsibility for liabilities of all other
business carried on by NHP prior to the Share Distribution. In addition, the
Separation Agreement is expected to provide for indemnification by the Company
of NHP and its officers, directors and controlling persons relating to this
Information Statement/Prospectus, except as to certain matters, for which NHP is
expected to indemnify the Company.

Tax Sharing Arrangement. The Tax Sharing Agreement is expected to provide
for the payment by the Company to NHP of tax liabilities of the Company,
computed on a stand-alone basis, for periods when the Company has been
affiliated with NHP, and for certain procedural matters relating to the
preparation of tax returns and responses to Internal Revenue Service proceedings
relating to taxes incurred by NHP or the Company on or before the Rights
Distribution Date.

Treatment of NHP and Company Options. The Separation Agreement is expected
to provide for the amendment of all NHP Options issued to NHP employees,
officers and directors so that each NHP Option will be converted into an
Adjusted NHP Option and an Add-on Company Option, all on the terms and
conditions set forth in "The Distribution of Company Common Stock -- Effect on
Outstanding NHP Options."

Repayment of Borrowing. At December 31, 1996, the Company owed NHP
approximately $3.4 million. This indebtedness was incurred in connection with
the Company's acquisition of Proctor on December 31, 1996. The Company incurred
an additional $4.6 million of indebtedness to NHP on April 16, 1997 in
connection with the Askew Acquisition. The Separation Agreement is expected to
require the Company to repay all amounts owed to NHP at the time of the Share
Distribution.

Contribution of Excess Cash Flow. The Merger Agreement relating to the
AIMCO Merger contains a provision requiring NHP to contribute to the Company an
amount equal to NHP's Free Cash Flow (as defined in the Merger Agreement) since
February 1, 1997 to the extent it exceeds the transaction costs incurred by NHP
in connection with the Merger.

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<PAGE> 25

CAPITALIZATION

The following table sets forth the capitalization of the Company at June
30, 1997. This table should be read in conjunction with the Consolidated
Financial Statements of the Company.

<TABLE>
<CAPTION>
JUNE 30, 1997
JUNE 30, 1997(1) (AS ADJUSTED)(2)
---------------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
LONG-TERM DEBT:
Servicing acquisition term loan........................... $ 5,961,745 $ 5,961,745
Servicing acquisition/working capital line-of-credit...... -- 9,000,000
SHAREHOLDER'S EQUITY:
Common stock, $.01 par value,
7,899,380 shares authorized,
4,217,478 issued and outstanding........................ 42,175 42,175
Additional paid-in capital................................ 21,330,690 21,330,690
Retained earnings......................................... 1,606,571 1,606,571
------------ ------------
Total stockholder's equity........................... 22,979,436 22,979,436
------------ ------------
Total capitalization................................. $ 28,941,181 $ 37,941,181
============ ============
</TABLE>

- ---------------
(1) Gives retroactive effect to a 789.94 per share stock split effective October
3, 1997.

(2) Gives effect to borrowings of $9,000,000 to repay intercompany payables to
NHP prior to the Share Distribution.

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<PAGE> 26

SELECTED FINANCIAL DATA

The following table sets forth selected financial and operating data of the
Company as of and for each of the years in the four-year period ended December
31, 1995, as of and for the three-month period ended March 31, 1996 and as of
and for the nine-month period ended December 31, 1996 and as of and for the six-
month periods ended June 30, 1997 (unaudited) and June 30, 1996 (unaudited). The
data for the three-month period ended March 31, 1996 and the nine-month period
ended December 31, 1996 are presented separately as a result of the Acquisition.
The table also sets forth pro forma income statement data for the year ended
December 31, 1996 giving effect to the Acquisition as though it occurred January
1, 1996. The selected financial data of the Company as of and for each of the
years in the four-year period ended December 31, 1995, as of and for the
three-month period ended March 31, 1996, as of and for the nine-month period
ended December 31, 1996 and as of and for the six-month period ended June 30,
1997 (unaudited) and June 30, 1996 (unaudited) were derived from the Company's
consolidated financial statements. The pro forma data (which are unaudited) are
derived from the footnotes to the Company's consolidated financial statements
contained elsewhere in this Information Statement/Prospectus. The pro forma
results are not necessarily indicative of operating results that would have been
achieved had the Acquisition actually occurred on January 1, 1996. Additionally,
the pro forma operating results are not intended to be a projection of results
of future operations. The selected financial and operating data should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements, pro forma financial
statements and related notes included elsewhere herein. For the purpose of
comparing the six months ended June 30, 1997 to the six months ended June 30,
1996, the three months ended March 31, 1996 has been combined with the three
months ended June 30, 1996. As a result of the Acquisition the six months ended
June 30, 1997 includes $576,000 of additional amortization expense as compared
to the six months ended June 30, 1996. For purposes of comparing the six months
ended June 30, 1997 and 1996, no other income statement amounts have been
impacted by the Acquisition. Additionally, the three months ended June 30, 1996
includes $576,000 of additional amortization expense compared to the three
months ended March 31, 1996.

21
<PAGE> 27

SELECTED CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THE COMPANY
---------------------------------------------------- WMF HOLDINGS LTD. AND SUBSIDIARIES
COMBINED -------------------------------------------------------------
6 MONTHS 6 MONTHS 9 MONTHS 3 MONTHS
ENDED ENDED PRO FORMA ENDED ENDED YEAR ENDED DECEMBER 31,
JUNE 30, JUNE 30, DECEMBER 31, DECEMBER 31, MARCH 31, -------------------------------------------------
1997 1996 1996(1) 1996 1996 1995 1994 1993 1992
----------- ----------- ------------ ------------ ---------- ---------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME
STATEMENT
DATA
Revenues.... $ 16,540 $ 14,098 $ 30,301 $ 23,473 $ 6,828 $ 21,999 $ 17,061 $ 16,271 $ 10,655
Expenses.... 16,089 13,371 29,416 22,318 6,523 21,222 17,223 15,550 10,612
Net income
(loss)..... 451 727 885 1,155 305 777 (162) 721 43
Net income
(loss) per
share
(2)........ .11 .17 0.21 0.27 0.07 0.16 (0.03) 0.12 0.01
Weighted
average
shares
outstanding
(2)........ 4,217,478 4,217,478 4,217,478 4,217,478 4,217,478 4,717,312 6,216,812 6,216,812 6,216,812
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
DECEMBER 31, MARCH 31, -------------------------------------------------
1996 1996 1995 1994 1993 1992
------------ ---------- ---------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE
SHEET DATA
Mortgage
loans held
for sale... $ 21,646 $ 45,880 $ 40,263 $ 23,116 $ 32,462 $ 5,110 $ 44,738 $ 32,401
Servicing
rights..... 22,921 21,961 22,460 8,477 8,466 8,100 7,150 8,319
Total
assets..... 74,055 90,297 88,097 48,976 57,176 31,689 65,347 50,233
Total debt
(3)........ 26,832 53,768 46,136 34,108 43,304 15,271 51,652 39,059
Shareholder's
equity..... 22,979 21,752 22,528 4,324 4,018 6,241 6,403 5,682
OTHER DATA
Cash Flows
from:
Operating
activities
(4)...... $ 3,001 $ 477 $ 11,520 $ 10,701 $ 819 $ 4,981 $ 1,244 $ (7,648) $ (21,866)
Investing
activities
(4)...... (3,040) (6,238) (9,624) (9,276) (548) (2,343) (3,062) (1,737) (5,023)
Financing
activities
(4)...... (268) 3,573 (292) (260) (32) (45) 2,664 11,071 26,880
EBITDA
(4)........ 4,450 4,085 8,256 6,502 1,754 4,743 2,497 3,481 1,829
</TABLE>

- ---------------

(2) Gives retroactive effect to a 789.94 per share stock split effective October
3, 1997.

(4) Operating, investing and financing cash flow represents the amount of cash
generated from operating, investing and financing activities, respectively,
as determined using GAAP.

22
<PAGE> 28

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION

OVERVIEW

On April 1, 1996, NHP acquired all of the outstanding capital stock of the
Company for consideration of approximately $21 million, in the form of $16.8
million in cash and 210,000 shares of NHP Common Stock. (For periods prior to
NHP's acquisition of the Company, the Company is referred to as "WMF Holdings.")

The following discussion and analysis presents the significant changes in
financial condition and results of operations of the Company for the six months
ended June 30, 1997 and June 30, 1996 and the nine months ended December 31,
1996, and the significant changes in financial condition and results of
operations of WMF Holdings for the three months ended March 31, 1996 and the
years ended December 31, 1995 and 1994. The results of operations of acquired
businesses are included in the Company's and WMF Holdings' Consolidated
Financial Statements from the date of acquisition. This discussion should be
read in conjunction with the Company's Consolidated Financial Statements and
notes thereto included in this Information Statement/Prospectus. For the purpose
of comparing the six months ended June 30, 1997 to the six months ended June 30,
1996, the three months ended March 31, 1996 has been combined with the three
months ended June 30, 1996. As a result of the Acquisition, the six months ended
June 30, 1997 includes $573,000 of additional amortization expense as compared
to the six months ended June 30, 1996. For purposes of comparing the six months
ended June 30, 1997 and 1996, no other income statement amounts have been
impacted by the acquisition. Additionally, the three months ended June 30, 1996
includes $573,000 of additional amortization expense compared to the three
months ended March 31, 1996.

As discussed in "Business," the Company has experienced significant growth
in its net income, revenues, annual production volume and servicing volume
during each of the three years ended December 31, 1996, 1995 and 1994. The
Company seeks to continue to expand its business through (i) acquisitions and
internal growth; (ii) design and delivery of new mortgage products; and (iii)
expansion into related businesses. On a going-forward basis, to the extent that
the Company is successful in completing acquisitions, the Company will
experience increased expenses associated with the amortization of goodwill and
acquired mortgage servicing rights and, if the acquisitions are financed by
additional indebtedness, an increase in interest expense. Through the
acquisitions, the Company's primary focus is to increase its mortgage
origination capabilities and servicing portfolio. Accordingly, such acquisitions
may result in a short-term decrease in income from operations during the period
from acquisition through a period necessary to integrate the acquired companies.

RESULTS OF OPERATIONS -- SUMMARY

The Company's primary business activities are commercial and multifamily
loan servicing, loan origination and sales of the loans to investors in the
secondary market. Revenues from mortgage banking activities are earned from the
origination of commercial and multifamily real estate mortgage loans and the
servicing of such loans. The Company's revenue includes loan servicing fees,
gains on sale of mortgage loans, interest income on loans prior to sale,
"placement fees" (revenue earned relating to utilization of escrow funds),
origination fee income and other income.

The Company's revenue is significantly influenced by the timing of
origination and sales of mortgage loans and is somewhat sensitive to economic
factors such as the general level of interest rates and demand for commercial
and multifamily real estate. As a result, future revenues may fluctuate due to
changes in these factors. See "Risk Factors -- Risks of Loss from Changes in
General Economic Conditions." Therefore, the Company's historical results may
not be indicative of future periods.

23
<PAGE> 29

The following table sets forth information derived from the Company's
consolidated statements of operations for each of the periods presented in
dollars and as a percentage of revenue.

SUMMARY FINANCIAL INFORMATION
RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THE COMPANY
---------------------------------------------------------------
WMF HOLDINGS LTD.
AND SUBSIDIARIES
COMBINED ------------------
PERIOD FROM PERIOD FROM PERIOD FROM PERIOD FROM
JANUARY 1, 1997 JANUARY 1, 1996 APRIL 1, 1996 JANUARY 1, 1996
TO TO TO TO
JUNE 30, 1997 JUNE 30, 1996 DECEMBER 31, 1996 MARCH 31, 1996
----------------- ----------------- ------------------- ------------------
(UNAUDITED) (UNAUDITED)
<C> <C>
<S> <C> <C> <C> <C> <C> <C>
REVENUE
Servicing fees, net.............. $ 5,631 34.0% $ 4,286 30.4% $ 7,274 31.0% $2,055 30.1%
Gain on sale of mortgage loans,
net............................. 5,917 35.8 4,711 33.4 8,113 34.6 2,107 30.9
Interest income.................. 2,111 12.8 1,976 14.0 3,388 14.4 862 12.6
Placement fee income............. 2,312 14.0 2,331 16.5 3,823 16.3 1,136 16.6
Other............................ 569 3.4 794 5.7 875 3.7 668 9.8
------- ----- ------- ----- ------- ----- ------ -----
Total revenue............... 16,540 100.0 14,098 100.0 23,473 100.0 6,828 100.0
------- ----- ------- ----- ------- ----- ------ -----
EXPENSES
Salaries and employee benefits... 7,654 46.3 5,584 39.5 9,975 42.5 2,770 40.5
General and administrative....... 3,826 23.2 2,814 20.0 5,237 22.3 1,168 17.1
Provision for loan servicing
losses.......................... 453 2.7 541 3.8 969 4.1 285 4.2
Interest......................... 603 3.6 804 5.7 1,012 4.3 308 4.5
Depreciation and amortization.... 2,947 17.8 1,785 12.7 3,981 17.0 551 8.1
Losses from Beverly Hills
Securities...................... -- 0.0 600 4.3 -- 0.0 600 8.8
------- ----- ------- ----- ------- ----- ------ -----
Total expenses.............. 15,483 93.6 12,128 86.0 21,174 90.2 5,682 83.2
------- ----- ------- ----- ------- ----- ------ -----
Income (loss) before income
taxes........................... 1,057 6.4 1,970 14.0 2,299 9.8 1,146 16.8
Income taxes..................... 606 3.7 1,243 8.8 1,144 4.9 841 12.3
------- ----- ------- ----- ------- ----- ------ -----
Net income (loss)................ $ 451 2.7% $ 727 5.2% $ 1,155 4.9% $ 305 4.5%
======== ===== ======== ===== ======== ===== ======= =====

<CAPTION>
WMF HOLDINGS LTD. AND SUBSIDIARES
---------------------------------------

YEAR ENDED DECEMBER 31,
---------------------------------------
1995 1994
----------------- -----------------
<S> <C> <C> <C> <C>
REVENUE
Servicing fees, net.............. $ 7,860 35.7% $ 6,182 36.2%
Gain on sale of mortgage loans,
net............................. 6,334 28.8 4,532 26.6
Interest income.................. 3,291 15.0 2,089 12.2
Placement fee income............. 3,999 18.2 2,244 13.2
Other............................ 515 2.3 2,014 11.8
------- ----- ------- -----
Total revenue............... 21,999 100.0 17,061 100.0
------- ----- ------- -----
EXPENSES
Salaries and employee benefits... 9,208 41.9 7,324 42.9
General and administrative....... 5,153 23.4 4,314 25.3
Provision for loan servicing
losses.......................... 856 3.9 654 3.9
Interest......................... 2,144 9.7 2,250 13.2
Depreciation and amortization.... 2,369 10.8 1,926 11.3
Losses from Beverly Hills
Securities...................... 692 3.1 720 4.2
------- ----- ------- -----
Total expenses.............. 20,422 92.8 17,188 100.8
------- ----- ------- -----
Income (loss) before income
taxes........................... 1,577 7.2 (127) (0.8)
Income taxes..................... 800 3.6 35 0.2
------- ----- ------- -----
Net income (loss)................ $ 777 3.6% $ (162) (1.0)%
======== ===== ======== =====
</TABLE>

SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996

As a result of the acquisition of the Company by NHP, all assets and
liabilities acquired were recorded at their fair value which resulted in an
increase of the recorded value of the Company's servicing rights of $10.7
million and goodwill of $5.1 million. The increase in these assets has resulted
in additional amortization expense during the six months ended June 30, 1997
compared to the six months ended June 30, 1996 of approximately $573,000. Such
additional amortization expense is the primary reason for the decline in net
income between the six months ended June 30, 1997 and June 30, 1996. For
purposes of comparing the six months ended June 30, 1997 to the six months ended
June 30, 1996, no other income statement amounts have been impacted by the
acquisition.

Consolidated revenue was $16.5 million and $14.1 million for the six months
ended June 30, 1997 and 1996, respectively. This 17 percent increase primarily
reflects the increased servicing portfolio which resulted from loan servicing
acquisitions of $1.5 billion during 1996 and increased loan origination activity
of $622 million for the six months ended June 30, 1997 compared to $511 million
in the six months ended 1996.

Servicing fees were $5.6 million and $4.3 million for the six months ended
June 30, 1997 and 1996, respectively. Revenue related to mortgage servicing is
based upon the unpaid principal balance of loans serviced. The increase in
servicing fees is a result of the principal balance of the Company's servicing
portfolio increasing from $4.9 billion on June 30, 1996 to $7.5 billion on June
30, 1997. The increase in the servicing portfolio is attributable primarily to
loan originations of $1.2 billion and the acquisitions of Proctor, ACR and Askew
which added rights to service loans with principal balances of $1.7 billion for
the period June 30, 1996 through June 30, 1997. The percentage increase in
servicing fee revenue of 30 percent is less than the 53 percent increase in the
servicing portfolio because the contractual servicing fee percentage on the
added servicing, primarily for insurance companies, is less than the Company's
historical average servicing rate.

24
<PAGE> 30

Gain on sale of mortgage loans of $5.9 million and $4.7 million for the six
months ended June 30, 1997 and 1996, respectively represents a 26 percent
increase. For the six months ended June 30, 1997 and 1996, respectively, the
Company originated $622 million and $511 million mortgage loans. The 26 percent
increase on gain on sale of mortgage loans is a result of the increase in loans
originated.

Interest income of $2.1 million and $2.0 million for the six months ended
June 30, 1997 and 1996, respectively, increased due to the increase in
originations for the six months ended June 30, 1997 compared to the six months
ended June 30, 1996, as discussed above.

Placement fee income of $2.3 million and $2.3 million for the six months
ended June 30, 1997 and 1996, respectively, was the result of earnings on
invested mortgagor escrow amounts. Earnings on such amounts have remained
constant even though the Company's escrows increased from $215 million on June
30, 1996 to $270 million on June 30, 1997. This is a result of the Company's
increased originations for the six months ended June 30, 1997 compared to the
six months ended June 30, 1996 which results in increased warehousing of the
originated loans which utilize escrow balances to reduce interest expense
related to the warehousing of loans rather than the generation of placement fee
income.

Other income of $569,000 and $794,000 for the six months ended June 30,
1997 and 1996, respectively, was the result of loan modifications, prepayment
penalties and recoveries. The $225,000 decrease is primarily related to the
recovery of approximately $475,000 in escrow advances that had previously been
written off during the six months ended June 30, 1996 offset by increased fees
from loan modifications, prepayment penalties and recoveries due to increased
originations and an increased servicing portfolio for the six months ended June
30, 1997.

The Company's total expenses consist of salaries and benefits (including
commissions), other general and administrative expenses, operating interest
expense, provision for loan servicing losses, amortization of mortgage servicing
rights, and other depreciation and amortization.

Salaries and benefits, the largest category of costs for the Company,
increase with loan production due primarily to the payment of commissions on
loan originations. Salaries and benefits of $7.7 million and $5.6 million for
the six months ended June 30, 1997 and 1996, respectively, represents a $2.1
million increase. This increase is due primarily to increased originations, as
discussed above, and the acquisitions of Proctor and Askew which occurred
subsequent to the six months ended June 30, 1996 and the acquisition of ACR in
May, 1996. These three acquisitions significantly increased the Company's number
of employees from 117 at June 30, 1996 to 225 at June 30, 1997.

General and administrative expenses consist of professional fees, travel,
management information, occupancy, telephone and equipment rental, and other
expenses. General and administrative expenses were $3.8 million and $2.8 million
for the six months ended June 30, 1997 and 1996, respectively. This $1.0 million
increase is a result of costs associated with acquisitions and the resulting
additional offices.

The Company increased the provision for loan servicing losses by $453,000
and $541,000 for the six months ended June 30, 1997 and 1996, respectively. The
decrease in addition to reserves is the result of Management's determination, as
part of its ongoing assessment of the reserve, that current market conditions do
not require any greater increase in reserves. The Company's principal balance of
Fannie Mae DUS loans in the servicing portfolio was $815 million and $660
million as of June 30, 1997 and 1996, respectively.

Interest expense of $603,000 and $804,000 for the six months ended June 30,
1997 and 1996, respectively, decreased due to the Company negotiating, effective
January 1, 1997, a lower cost of borrowing in connection with its warehouse line
of credit used to originate loans.

Depreciation and amortization of $2.9 million and $1.8 million for the six
months ended June 30, 1997 and 1996, respectively, represents a $1.1 million
increase. Approximately $573,000 of this increase is due to the increased asset
bases as a result of the acquisition of the Company by NHP discussed above. The
remainder of the increase is primarily a result of the amortization of
additional servicing rights and goodwill.

25
<PAGE> 31

Losses from Beverly Hills Securities of $0 and $600,000 for the six months
ended June 30, 1997 and 1996, respectively, decreased due to the Company writing
off its investment/advances in Beverly Hills Securities during the first quarter
of 1996.

1996 RESULTS OF OPERATIONS COMPARED TO 1995

As a result of the April 1, 1996 acquisition of the Company by NHP, all
assets and liabilities acquired were recorded at their fair value which resulted
in an increase of the recorded value of the Company's servicing rights of $10.7
million and goodwill of $5.1 million. The increase in these assets has resulted
in additional amortization expense during the nine months ended December 31,
1996 of $1.7 million. No other income statement amounts have been impacted by
the acquisition.

Consolidated revenue was $23.5 million and $6.8 million for the nine months
ended December 31, 1996 and the three months ended March 31, 1996, respectively.
Combined revenues were $30.3 million for the twelve months ended December 31,
1996, a 37.7 percent increase over consolidated revenue of $22.0 million for the
year ended December 31, 1995. These increases reflected the increased servicing
portfolio which resulted from acquisitions and the increased loan origination
activity in 1996.

Servicing fees were $7.3 million for the nine months ended December 31,
1996 and $2.0 million for the three months ended March 31, 1996. Servicing fee
income for the twelve months ended December 31, 1996 was $9.3 million, an
increase of $1.4 million or 18.7 percent from $7.9 million in 1995. Revenue
related to mortgage servicing is based upon the unpaid principal balance of
loans serviced. The principal balance on these loans was $6.2 billion at
December 31, 1996, as compared to $4.5 billion at March 31, 1996, and $4.4
billion at December 31, 1995. The increases are attributable primarily to loan
originations of $962 million for the nine months ended December 31, 1996, $168
million for the three months ended March 31, 1996, and the Proctor and ACR
Acquisitions which added rights to service loans with principal balances of $1.3
billion as of December 31, 1996.

Gain on sale of mortgage loans of $8.1 million for the nine months ended
December 31, 1996 and $2.1 million for the three months ended March 31, 1996 was
the result of the loan originations discussed above. Gain on sale of mortgage
loans for the twelve months ended December 31, 1996 was $10.2 million, an
increase of $3.9 million or 61.4 percent from $6.3 million in 1995 due to the
increased gains from origination of permanent FHA loans and increased
originations of $326 million during 1996 relative to 1995. In addition, the
Company began allocating the cost to originate loan servicing to a separate
asset for originated permanent FHA mortgage loans pursuant to the Company's
adoption of SFAS No. 122 on January 1, 1996. See Note 2 to the Consolidated
Financial Statements appearing elsewhere in this Information
Statement/Prospectus for more information. Prior to 1996, the Company treated
all costs incurred to originate loans and loan servicing as a component of the
loan originated. As a result, the basis of permanent FHA loans originated was
lower, resulting in additional gains of $2.7 million and $150,000 for the nine
months ended December 31, 1996 and the three months ended March 31, 1996,
respectively.

Interest income of $3.4 million for the nine months ended December 31,1996
and $0.9 million for the three months ended March 31, 1996 increased because the
average amount of loans held for sale increased from $37.3 million to $48.1
million for the three months ended March 31, 1996 and the nine months ended
December 31, 1996. Combined interest income of $4.3 million for the twelve
months ended December 31, 1996 was $1.0 million or 29.1 percent greater than
1995 interest income of $3.3 million because of higher average amounts of
mortgage loans held for sale.

Placement fee income of $3.8 million for the nine months ended December
31,1996 and $1.1 million for the three months ended March 31, 1996 was the
result of earnings on invested mortgagor escrow amounts. Placement fee income
for the twelve months ended December 31, 1996 was $4.9 million, an increase of
$0.9 million or 24.0 percent from $4.0 million in 1995. Earnings on such amounts
have increased as the mortgage servicing portfolio has increased.

Other income of $0.9 million for the nine months ended December 31, 1996
and $0.7 million for the three months ended March 31, 1996 was the result of
income from loan modifications, prepayment penalties

26
<PAGE> 32

and recoveries. Other income for the twelve months ended December 31, 1996 was
$1.5 million, an increase of $1.0 million or 199.3 percent from $0.5 million in
1995. Approximately $0.5 million of this increase is attributable to a recovery
of escrow advances during 1996 that had previously been written off and the
remainder is primarily attributable to an increase of approximately $0.5 million
in termination and extension fees during 1996.

Salaries and benefits, the largest category of costs for the Company,
increase with loan production due primarily to the payment of commissions on
loan originations. Salaries and employee benefits of $10.0 million and $2.8
million for the nine months ended December 31, 1996 and the three months ended
March 31, 1996, respectively, were 42.5 percent and 40.5 percent of total
revenues, respectively. Salaries and employee benefits for the twelve months
ended December 31, 1996 were $12.8 million, an increase of $3.6 million or 38.4
percent from $9.2 million in 1995. The increase in these costs is directly
correlated to the increase in revenue since most of the Company's sales
professionals are compensated based on loan origination fees. Combined salaries
and employee benefits on a consolidated basis remained relatively constant as a
percent of total revenues at 42.1 percent in 1996 and 41.9 percent for 1995.

General and administrative expenses consist of professional fees, travel,
management information systems, occupancy, telephone and equipment rental, and
other expenses. General and administrative expenses were $5.2 million and $1.2
million for the nine months ended December 31, 1996 and the three months ended
March 31, 1996. General and administrative expenses for the twelve months ended
December 31, 1996 were $6.4 million, an increase of $1.3 million or 24.3 percent
from $5.1 million in 1995 resulting from the costs associated with acquisitions,
the acquisition of additional offices, and increased production volume during
1996.

The Company increased the provision for loan servicing losses by $1.0
million in the nine months ended December 31, 1996 and $0.3 million for the
three months ended March 31, 1996. The provision for loan servicing losses for
the twelve months ended December 31, 1996 was $1.3 million, an increase of $0.4
million or 46.4 percent from $0.9 million in 1995. The increase is due to the
increase of the related principal balance of Fannie Mae DUS loans in the
servicing portfolio which was $776 million at December 31, 1996, $647 million at
March 31, 1996, and $648 million at December 31, 1995.

Interest expense of $1.0 million and $0.3 million for the nine months ended
December 31, 1996 and the three months ended March 31, 1996, respectively
increased due to the increase in the average amount of loans held for sale
discussed above. Combined interest expense of $1.3 million for the twelve months
ended December 31, 1996 was $0.8 million or 38.5 percent less than interest
expense of $2.1 million for the year ended December 31, 1995 due to the
repayment of a $5.0 million loan from the Company's previous shareholder in the
first quarter of 1996 partially offset by the increase in average amount of
mortgage loans held for sale.

Depreciation and amortization of $4.0 million and $0.5 million for the nine
months ended December 31, 1996 and the three months ended March 31, 1996,
respectively increased due to the increased asset bases as a result of the
acquisition of the Company by NHP discussed above. Combined depreciation and
amortization of $4.5 million for the twelve months ended December 31, 1996 was
$2.1 million or 91.3 percent greater than depreciation and amortization of $2.4
million for the year ended December 31, 1995. Most of this increase is
attributable to the $1.7 million of additional amortization expense resulting
from both goodwill and the increased value of mortgage servicing rights after
the acquisition of the Company by NHP. The acquisition costs of both the ACR and
Proctor Acquisitions were allocated to the acquired assets based upon their fair
values. Such assets are being amortized over the life of the related assets
which is based upon the period of expected fees from servicing rights or loans
included in the production pipeline. The impact of such acquisitions was not
material to 1996 operations.

27
<PAGE> 33

In July 1994, the Company exchanged its stock in WMF Residential Mortgage
Corporation ("Residential"), a wholly-owned subsidiary, for a 40 percent limited
partnership interest in Beverly Hills Securities Company, Ltd. ("Beverly").
Residential and Beverly specialized in the origination, purchase, sale, and
servicing of single family residential mortgage loans. No gain or loss was
recognized on the exchange. The Company recognized $692,000 and $720,000 in
equity losses relating to Beverly during 1995 and 1994, respectively. At
December 31, 1995, the carrying value of the Company's investment in Beverly was
written off as a result of operating losses and concerns about the
recoverability of the investment. The Company's exposure was limited to its
original investment amount in and advances to Beverly. The Company had advanced
approximately $1,086,000 to Beverly at December 31, 1995. During 1996,
approximately $532,000 of the advance to Beverly was collected and the remaining
balance was written off.

1995 RESULTS OF OPERATIONS COMPARED TO 1994

Consolidated revenue for the year ended December 31, 1995 was $22.0
million, a 28.9 percent increase over consolidated revenue of $17.1 million for
the year ended December 31, 1994. The increase reflected the increased servicing
portfolio and the increased origination and loan sale activity in 1995.

For the year ended December 31, 1995, the Company originated $803.0 million
in commercial and multifamily loans, a 55.0 percent increase over the $518.0
million of origination volume for 1994. The increased origination level was
primarily attributable to the additional sales and refinancing activity in the
marketplace. All servicing rights associated with the 1995 originations were
retained by the Company in its servicing portfolio. The 1995 activity resulted
in an increase in servicing fees, gain on sale of mortgage loans, interest
income and placement fee income.

Servicing fees, net of guarantee fees and pool insurance fees, on a
consolidated basis in 1995 were $7.9 million, an increase of $1.7 million or
27.1 percent from $6.2 million in 1994. The increase in servicing fees is
attributable to a $787.4 million or 22.0 percent increase in the Company's
servicing portfolio since December 31, 1994, resulting from both servicing
portfolio acquisitions and loan origination volume.

Gain on sale of mortgage loans was $6.3 million in 1995, an increase of
$1.8 million or 39.8 percent from $4.5 million in 1994. The increase in gain on
sale of mortgage loans is attributable to a $285.0 million, or 55.0 percent
increase in 1995 production volume compared to 1994 production volume of $518.0
million.

Interest income was $3.3 million in 1995, an increase of $1.2 million or
57.6 percent from $2.1 million in 1994. The increase in interest income occurred
because the average monthly balance of mortgage loans held for sale in 1995
increased $13.9 million or 104.2 percent as a result of the increase in
production volume in 1995.

Placement fee income was $4.0 million in 1995, an increase of $1.8 million
or 78.2 percent from $2.2 million in 1994. This increase was the result of
increased earnings on invested mortgagor escrow amounts. Earnings on such
amounts have increased as the mortgage servicing portfolio increased to $4.4
billion at December 31, 1995, an increase of approximately $787.4 million or
22.0 percent over the $3.6 billion in loans serviced at December 31, 1994. In
addition, the Company was able to negotiate a more favorable earnings rate for
invested escrow funds during 1995.

Other income was $0.5 million in 1995, a decrease of $1.5 million or 74.4
percent from $2.0 million in 1994. The decrease in other income is primarily
attributable to (1) a decrease of $0.7 million in prepayment penalties from 1994
as a result of the refinance activity caused by lower interest rates during 1994
relative to 1995, and (2) a decrease of $0.7 million in rental income on the
Sheffield Court Apartments due to the sale of that property in February 1995, as
discussed below.

Sheffield Acquisition Corp. ("SAC") was incorporated on October 7, 1992 as
a wholly-owned subsidiary of Washington Mortgage, to acquire and manage one
multifamily property known as the Sheffield Court Apartments. This apartment
complex was the underlying collateral for a loan originated and serviced by the
Company and sold to a life insurance company. The Company maintained a 20
percent recourse liability on the loan. The loan subsequently defaulted and the
life insurance company acquired and then sold the property to SAC for a purchase
price of $2,000,000, with participation debt of $1,800,000 provided by the life
insurance

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company. The Company guaranteed $400,000 of the note. In February 1995, the
Company sold the Sheffield Court Apartments for $2,464,000, paid off the note
with the life insurance company and realized a loss of approximately $54,000.
Washington Mortgage dissolved SAC in 1996.

Salaries and employee benefits on a consolidated basis in 1995 were $9.2
million, an increase of $1.9 million or 25.7 percent from $7.3 million in 1994.
The increase in these costs is directly correlated to the increase in revenue
since most of the Company's sales professionals are compensated based on loan
origination fees. Salaries and employee benefits on a consolidated basis
remained relatively constant as a percent of total revenues at 41.9 percent and
42.9 percent for 1995 and 1994, respectively.

General and administrative expenses on a consolidated basis in 1995 were
$5.1 million, an increase of $0.8 million or 19.5 percent from $4.3 million in
1994, representing 23.4 percent and 25.3 percent of total revenue, respectively.
The increase is primarily attributable to a legal settlement of $550,000 in
1995, and the related legal fees, as discussed below.

In October 1990, the Federal Deposit Insurance Corporation ("FDIC")
terminated a servicing agreement between Vienna Mortgage Corporation ("VMC"), a
former subsidiary of the Company, and The National Bank of Washington ("NBW"),
which had been placed into receivership. The FDIC disavowed the contract of NBW,
and VMC disputed the authority of the FDIC to terminate the loan servicing
agreement without the payment of a $770,000 termination fee, which was
stipulated in the servicing agreement with NBW. VMC, using set-off provisions,
held back the $770,000 on the date of transfer of the terminated servicing
rights to the FDIC. In July 1991, the FDIC filed suit and in December 1991
obtained a judgment against VMC for the $770,000 plus accrued interest. VMC
appealed the U.S. District Court judgment to the U.S. Court of Appeals for the
Fourth Circuit, which affirmed the District Court's decision. VMC subsequently
petitioned the United States Supreme Court for a hearing, but the petition was
denied in the fall of 1993. During 1995, the Company settled the judgment by
paying $550,000 on behalf of VMC. The Company has no further liability in this
matter. VMC was dissolved after the settlement with the FDIC.

Interest expense decreased from $2.3 million in 1994 to $2.1 million in
1995, a decrease of 4.7 percent. Even though the average loans held for sale
increased in 1995 from 1994 balances, the Company was able to negotiate more
favorable interest rates thereby resulting in a decreased interest expense.

Depreciation and amortization expense increased from $1.9 million in 1994
to $2.4 million in 1995, an increase of $0.5 million or 23.0 percent as a result
of additional purchased mortgage servicing rights in 1995. However, depreciation
and amortization expense remained relatively constant as a percent of total
revenue at 10.8 percent and 11.3 percent for 1995 and 1994, respectively.

Losses from Beverly Hills Securities of $692,000 in 1995 and $720,000 in
1994 relate to equity losses in the Company's investment in Beverly, as
discussed previously.

LIQUIDITY AND CAPITAL RESOURCES

Cash inflow from operating activities for the period January 1, 1997
through June 30, 1997 of $3.0 million increased from operating cash inflow of
$0.5 million for the period January 1, 1996 through June 30, 1996. Such increase
was primarily due to: (i) increased other liabilities; and (ii) decreased
servicing advances.

The Company's principal capital needs are the financing of loan funding
activities, servicing advances, and the acquisition of commercial and
multifamily mortgage companies and servicing portfolios. To meet these needs,
the Company currently utilizes the following warehouse lines of credit, credit
lines and term loans.

The Company currently maintains two warehouse lines of credit, amounting to
$185 million. The warehouse lines are secured by the related mortgage loans held
for sale and bear interest at a rate equal to (i) the London Interbank Offered
Rate ("LIBOR") plus 3/4 percentage points (with respect to one facility for $150
million) and (ii) the Euro-Rate plus 3/4 percentage points (with respect to the
other facility for $35 million). To the extent the Company maintains
compensating balances, the rate on the $150 million line is reduced to 3/4
percent and the rate on the $35 million line is reduced to 3/4 percent. The
lines have one year

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<PAGE> 35

terms and expire November 1997 in the case of the $150 million facility and
April 30, 1998 in the case of the $35 million facility. The Company has received
a commitment to extend the $150 million facility to September 30, 1998. The
credit limit for the $150 million line has been temporarily increased at times
to allow increased borrowings beyond the limit. The $35 million may also be used
to fund advances required by the Company as a primary servicer and fund
liquidity advances required by the Company as a master servicer of
collateralized mortgage-backed securities. The base interest rates on this line
of credit related to these types of advances are 1.50 to 2.0 percent for
balance-funded borrowings and the Euro-Rate plus 1.5 to 2.0 basis points for
non-balance-funded borrowings.

The Company maintains a $10 million credit line for working capital
purposes and to fund acquisitions of servicing rights (the "Working Capital
Line"), which is secured by related servicing rights acquired. The Working
Capital Line bears interest at LIBOR plus three and one-half percent (or three
and one-half percent to the extent compensating balances are maintained). The
Working Capital Line renews annually until June 2001, when it converts to a term
loan due in quarterly installments through June 2006.

The Company is also obligated on a $6.0 million term loan that was
converted from a credit line in October 1996. This loan bears interest at LIBOR
plus three percent (or three percent to the extent compensating balances are
maintained) and is secured by servicing rights relating to loans with an
approximate unpaid principal balance of $5.1 billion as of June 30, 1997. The
loan is repayable in quarterly installments on a 10-year amortization schedule
with the remaining balance due in June 2001.

At June 30, 1997, the Company had approximately $11.8 million available for
working capital purposes, which consisted of approximately $6.3 million in cash
and $5.0 million of borrowings available under the Company's various credit
facilities, excluding its warehouse lines of credit. At December 31, 1996 and
June 30, 1997, the Company had negative working capital of $1.4 million and $2.9
million respectively, primarily due to payables to NHP.

The Company has received a commitment for a secured revolving credit
facility for 1997 for up to $35 million, subject to certain conditions,
including completion of satisfactory documentation, the absence of material
adverse changes and the sale of participations in the loan. After 18 months,
this facility converts to a five year term loan. The purpose of this line of
credit is to finance the acquisition of commercial mortgage banking companies.
The availability of this line will depend on the value of the assets being
purchased and servicing rights available as security for this line. The interest
rates on this line of credit are expected to be 3.0 percent for balance-funded
borrowings and LIBOR plus 3.0 percent for non balance-funded borrowings. There
can be no assurance that the conditions will be satisfied and the loan
completed.

The Company's various debt obligations contain restrictions including the
following: restrictions on the maximum ratio of debt to adjusted tangible net
worth; maximum delinquency rates for loans serviced by the Company; minimum
standards for adjusted tangible net worth; minimum debt service coverage ratios;
minimum ratios of liquid assets to tangible net worth; and minimum servicing
portfolio size. In addition, these debt obligations restrict loans, capital
contributions, management fees and asset transfers to affiliates. The Company is
also required to remain in compliance with applicable FHA, GNMA and investor net
worth requirements and to remain in good standing with FHA, GNMA and investors.

The Company has also established a letter of credit of $4.4 million as of
June 30, 1997 on behalf of Fannie Mae to fund any loan losses incurred under the
DUS Program. This letter of credit is secured by cash and mortgage-backed
securities with a market value of $5.3 million.

Concurrent with the Share Distribution, Capricorn is expected to purchase
546,448 newly issued shares of Company Common Stock at a price of $9.15 per
share pursuant to a commitment entered into by Capricorn which is subject to
certain conditions. This transaction would provide the Company with additional
equity of $5 million. See "The Distribution of Company Common
Stock -- Description of the Distribution."

The Company believes its funds on hand at June 30, 1997, its cash flow from
operations, its unused borrowing capacity under its credit lines, and its
continuing ability to obtain financing will be sufficient to meet its
anticipated operating needs and non-discretionary capital expenditures for at
least the next twelve months. The Company has no long-term material capital
commitments, and its long-term need for capital is primarily

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<PAGE> 36

derived from the need to maintain warehousing lines of credit to continue its
loan origination activity and the need for capital for potential future
acquisitions. The Company does not foresee any restriction on its ability to
obtain warehousing lines of credit of at least the amount currently available.
The magnitude of the Company's acquisition and investment program will be
governed to some extent by the availability of capital. There can be no
assurance that the Company will not be required to seek additional capital
through new credit lines, debt offerings or equity offerings.

At June 30, 1997, the Company had a liability of $3.4 million due to NHP as
a result of a loan from NHP to fund the acquisition of Proctor. Also, as of June
30, 1997, the Company had a liability of $4.6 million due to NHP as a result of
a loan from NHP to fund the acquisition of Askew. The Company will repay the
indebtedness in connection with the Share Distribution. Pursuant to the Merger
Agreement, the Company will receive a portion of the cumulative free cash flow
produced by NHP during the period from February 1, 1997 to the effective time of
the Merger. See "Arrangements Between NHP and the Company after the Share
Distribution." The Company intends to fund the repayment of the borrowings from
NHP through a combination of working capital, NHP Free Cash Flow (as defined in
the Merger Agreement), draws on available credit lines and/or proceeds from the
Capricorn Transaction.

INFLATION

The Company has generally been able to offset cost increases due to
inflation with increases in revenues. Accordingly, management does not believe
that inflation has had a material effect on its results of operations to date.
However, a significant portion of the Company's revenue is somewhat sensitive to
economic factors including real estate market conditions and the general level
of interest rates. To the extent future inflation increases the general level of
interest rates, it could negatively impact the Company's results of operations.
In addition, there can be no assurance that the Company's other operations will
not be adversely affected by inflation in the future.

NEW ACCOUNTING STANDARDS

In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and Assets to be Disposed of," which
requires the adjustment of the carrying value of long-lived assets and certain
identifiable intangibles if their value is determined to be impaired as defined
by the standard. The Company's adoption of SFAS No. 121 on January 1, 1996 did
not have a material effect on the Company's financial position or results of
operations.

In May 1995, the FASB issued SFAS No. 122, "Accounting for Mortgage
Servicing Rights," which is effective for fiscal years beginning after December
15, 1995. This statement amends SFAS No. 65, "Accounting for Certain Mortgage
Banking Activities," to require that a mortgage banking enterprise recognize as
separate assets the rights to service mortgage loans, however those rights are
acquired. The Company adopted SFAS No. 122 in 1996. The primary change resulting
from SFAS No. 122 is that servicing rights retained by the Company after the
origination and sale of the related loan are required to be capitalized by
allocating the total cost incurred between the loan and the servicing rights
based on their relative fair value if it is practicable to determine the fair
value of the mortgage servicing rights. If it is not practicable to determine
the servicing right's fair value, then no value is allocated to the servicing
rights. The Company has determined that it is only practicable to estimate the
fair value of servicing rights related to permanent FHA originated loans as
other loan types have a limited secondary market. The Company capitalized
approximately $2.8 million in originated servicing rights during 1996. SFAS No.
122 also requires the Company to evaluate all mortgage servicing rights for
impairment by comparing the carrying value to fair value and recording a
valuation allowance if fair value is less.

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation," which is effective for fiscal years beginning after December 15,
1995. SFAS No. 123 encourages, but does not require, a fair value-based method
of accounting for employee stock options or similar equity instruments. It also
allows an entity to elect to continue to measure compensation cost under
Accounting Principles Board

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<PAGE> 37

Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25"), but
requires pro forma disclosures of net income and earnings per share as if the
fair value-based method of accounting had been applied. Adoption of this
statement did not impact the financial statements of the Company, since it did
not have a stock option plan at December 31, 1996. In connection with the Share
Distribution, the Company plans to institute a new employee stock option plan.
Management believes that the new stock option plan will not have a material
effect on the Company's financial position or results of operations in 1997.

In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers of
Financial Assets and the Extinguishment of Liabilities," which provides
accounting and reporting standards for transfers and servicing of financial
assets and extinguishment of liabilities based on consistent application of a
"financial-components" approach that focuses on control. Under that approach,
after a transfer of financial assets, an entity recognizes the financial and
servicing assets it controls and the liabilities it has incurred, derecognizes
financial assets when control has been surrendered, and derecognizes liabilities
when extinguished. The new standard is effective for transfers and servicing of
financial assets and extinguishments of liabilities occurring after December 31,
1996. Management does not expect the new standard to have a material effect on
the Company's financial position or results of operations.

In February 1997, FASB issued SFAS No. 128, "Earnings per Share." This
statement changes the requirements for calculation and disclosure of earnings
per share. This statement eliminates the calculation of primary earnings per
share and requires the disclosure of basic earnings per share and diluted
earnings per share. There will be no impact to the Company's earnings per share
as a result of adoption of SFAS No. 128.

In June 1997, FASB issued SFAS No. 130, "Reporting Comprehensive Income."
This statement states that all items that are required to be recognized under
accounting standards as components of comprehensive income are to be reported in
separate statement of comprehensive income. This statement is effective
beginning January 1, 1998. Management does not expect the new standard to have a
material effect on net income as already reported.

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INDUSTRY OVERVIEW

The Company believes that the financing of commercial and multifamily real
estate offers significant growth opportunities. Commercial and multifamily real
estate encompasses a wide spectrum of assets including multifamily, office,
industrial, retail and hospitality. These assets are financed by an estimated
$1.0 trillion of outstanding commercial real estate debt. During the past ten
years, total commercial mortgage originations have averaged approximately $210
billion annually, of which approximately 80 percent to 85 percent consist of
non-multifamily assets. The Company anticipates that on a stabilized basis, the
commercial real estate market will require debt financing for existing
properties of approximately $120 to $140 billion annually, plus additional
amounts for new construction.

Commercial mortgage banks have arranged a significant portion of the debt
financing for commercial real estate. Historically, commercial mortgage banks
originated and serviced loans for life insurance companies in specified
geographic regions. In addition to providing loans to life insurance companies,
some commercial mortgage banks acted as originators for GSEs such as Fannie Mae
and Freddie Mac, and also acted as brokers for other lenders. As a result, a
fragmented industry has developed which is comprised of small local and regional
firms.

However, since the early 1990s the commercial mortgage banking industry has
experienced significant change, in part due to the growth in commercial mortgage
securitization, the expanded involvement of GSEs, increased borrower
sophistication and advances in information technology. Many of the existing
firms lack the capital and financial sophistication to compete effectively in
today's rapidly changing market. Accordingly, the Company believes the
commercial mortgage industry is going through a period of consolidation similar
to that experienced in the residential mortgage industry. Although consolidation
provides significant growth opportunities for the Company, certain risks are
also involved. See "Risk Factors -- Risks of Inability to Complete or
Successfully Integrate Acquisitions or Enter into New Business Lines."

The industry is already showing signs of consolidation. For example, the
MBA reported that as of June 1996, ten commercial mortgage banks (including the
Company) had servicing portfolios greater than $5 billion, compared to three
companies in June 1992. Moreover, as measured by unpaid principal balance of
loans serviced, the top ten companies serviced 52 percent of the outstanding
commercial loans administered by the 100 largest companies involved in
commercial loan servicing. In 1992, the ten largest servicers accounted for 21
percent of the loans serviced by the 100 largest companies.

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BUSINESS

COMPANY OVERVIEW

The Company is one of the largest independent commercial mortgage bankers
in the United States as measured by servicing portfolio size based on the 1996
MBA Survey and is the largest originator of FHA-insured multifamily and
healthcare loans based on statistics provided by HUD. The Company originates,
underwrites, structures, places, sells and services multifamily and commercial
real estate loans. Through its relationships with GSEs, investment banks, life
insurance companies, commercial banks and other investors, the Company provides
and arranges financing to owners of multifamily and commercial real estate on a
nationwide basis using both a retail and wholesale network. The Company
generates revenues through origination fees, servicing fees, net interest income
on loans held for sale and placement fees. As of June 1996, the Company was the
tenth largest servicer of multifamily and commercial real estate loans in the
country based on the MBA Survey. At the time of the survey, the Company serviced
a portfolio of approximately $4.9 billion, and the average portfolio size for
the top ten servicers was approximately $10.4 billion. In the year ended
December 31, 1996 and the first 6 months of 1997, the Company originated $1.1
billion and $622.4 million, respectively, of multifamily and commercial real
estate mortgages.

The Company believes that it is well positioned to compete effectively in
the commercial real estate financing industry based on its capitalization,
geographic scope and services provided. The commercial and multifamily mortgage
banking industry is increasingly characterized by expensive technological
demands, large and sophisticated infrastructure for real estate underwriting and
risk evaluation and the rapid emergence of the securitized market. These
developments will, in the Company's judgment, lead to the creation of
sophisticated and well-capitalized mortgage finance enterprises. The Company
seeks to use its existing infrastructure and leverage its market position to
increase market share of its established businesses and grow its commercial
business.

The Company is a Delaware corporation formed in October 1992 to hold the
operations of WMF Huntoon Paige and Washington Mortgage, which are now
wholly-owned subsidiaries of the Company. WMF Huntoon Paige has carried on the
business of originating and servicing multifamily mortgages insured by the FHA
under various owners and under various names since 1979 and was acquired by the
predecessor of the Company in 1991. Washington Mortgage, and entities it has
acquired, has carried on the business of originating and servicing multifamily
and commercial mortgages under various owners and under various names since
1984. The Company was acquired by NHP on April 1, 1996. The principal executive
offices of the Company are located at 1593 Spring Hill Road, Suite 400, Vienna,
Virginia 22182, phone (703) 610-1400.

STRATEGIC OBJECTIVES

The Company seeks to increase reported earnings and cash flow through (i)
acquisitions and internal growth, (ii) design and delivery of new mortgage
products, and (iii) expansion into related businesses.

Acquisitions. The Company has pursued a strategy of acquiring both
multifamily and commercial mortgage businesses which either serve key real
estate markets in the United States or provide niche or specialized services
that enhance its product line, and of acquiring additional servicing portfolios.
As a result of acquisitions and internal growth, the Company has increased loan
originations from approximately $240 million in 1992 to approximately $1.1
billion in 1996, or a compound annual growth rate of 46.9 percent and its
servicing portfolio from approximately $3.0 billion to $6.2 billion for a
compound annual growth rate of 20.0 percent. The characteristics of firms the
Company seeks to acquire include active and productive loan origination staffs,
significant market share and servicing portfolios of $250 million or more.

In furtherance of its acquisition strategy, the Company routinely reviews,
and conducts investigations of, potential acquisitions of multifamily and
commercial mortgage businesses. When the Company believes a favorable
opportunity exists, the Company seeks to enter into discussions with the owners
of such businesses regarding the possibility of an acquisition by the Company.
As of the date of this Information Statement/Prospectus, the Company does not
have any agreements for pending acquisitions and has not entered

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into any letters of intent with respect to pending acquisitions. The Company is
currently in serious negotiations with various parties relating to the
acquisitions of both stock and assets which would be acquired for aggregate
consideration of approximately $10 million (which may be paid in either cash,
shares of Company Common Stock, or some combination of the two) and which could
occur soon, including negotiations with The Robert C. Wilson Company ("Wilson"),
a Houston-based commercial mortgage banking company. The Company and Wilson have
agreed in principle for the Company to acquire all of Wilson's issued and
outstanding common stock for a purchase price of $4 million in cash (80 percent
of which would be paid at closing and the remaining 20 percent of which would be
paid in the form of earnouts over a 42 month period). As of August 31, 1997,
Wilson had a total servicing portfolio of $570 million and Wilson originated
approximately $332 million in mortgages in its fiscal year ended August 31,
1997. The Company's Board of Directors has approved the acquisition of the stock
of Wilson, but the parties have not entered into a definitive contract. There
can be no assurance that any of these or other negotiations will lead to
definitive agreements, or, if agreements are reached, that any or all of the
transactions would be consummated.

During 1996, the Company increased its portfolio of serviced mortgages by
40.9 percent from $4.4 billion to $6.2 billion, primarily as a result of the
Proctor and ACR Acquisitions, as well as new originations.

- On December 31, 1996, the Company acquired all of the common stock
of Detroit-based Proctor, the 37th largest commercial mortgage
banking firm in the United States based on the MBA Survey. The
Company paid approximately $3.7 million in cash to acquire Proctor.
The acquisition brought to the Company a $1.1 billion loan servicing
portfolio of multifamily, retail and office building mortgages, as
well as 17 active correspondent relationships with life insurance
companies. Proctor originated approximately $221 million in
commercial mortgage loans in 1996.

- On May 13, 1996, the Company completed the purchase of a portion of
the loan production pipeline and servicing, as well as certain other
assets, of ACR for approximately $4.2 million plus potential future
payments based on realization of loans closed from the pipeline
through August 1997. The acquired pipeline and loan production
offices originated approximately $138 million in multifamily and
healthcare loans for the Company in 1996.

Additionally, on April 16, 1997, the Company purchased substantially all of
the mortgage banking assets of Askew in Dallas, Texas for $4.6 million,
excluding transaction costs. Askew is a multifamily and commercial mortgage bank
with correspondent relationships with 14 insurance companies, which originated
$375 million of mortgages in 1996. The Askew Acquisition increased the Company's
mortgage servicing portfolio by $425 million and gives the Company access to the
traditional insurance company whole-loan buyers in the markets served by Askew
as well as a new source of loans for securitization through the Company's
capital market relationships.

The Company also grows its servicing portfolio through the acquisition of
servicing rights. Since 1992, the Company has acquired servicing rights on
approximately $1.3 billion of mortgages in over 44 transactions. The Company
routinely reviews and conducts investigations of potential acquisitions of
servicing rights and, at any one time, may be involved in transactions in which
it will acquire servicing rights. As of the date of this Information
Statement/Prospectus, the only pending transaction involving acquisition of
servicing rights that is material in terms of the size of the portfolio covered
is an acquisition of servicing rights to an approximately $275 million portfolio
of FHA insured loans. The Company expects to acquire the servicing rights to
this portfolio on October 31, 1997 for a cash payment of approximately $4.1
million. The rights to service the portfolio will expire on dates between
January 2001 and September 2002, and the Company will be required to purchase
the underlying loans at that time, which it may then retain or resell. The
Company intends to resell such loans and retain servicing rights, but there can
be no assurance that it will be able to resell the loans at that time, or that
it will be able to resell the loans and retain mortgage servicing rights.

Design and delivery of new mortgage products. Since 1992, the Company has
been involved in developing more than eight new products including one of the
first whole-loan conduits (Common Sense(SM)), a revolving credit facility for
REITs and a forward commitment program for tax-credit new construction. Using
these products, the Company has originated loans totaling over $600 million from
1992 to 1996. In the past six months, the Company has enhanced its bridge loan
product for multifamily lending as well as added a

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number of life company products and a securitized loan product with a major Wall
Street conduit for commercial lending. Within the multifamily and commercial
mortgage business, the Company intends to develop new financing products in
response to changing market conditions, including continued development of
bridge loan products and development of participating loan products. There can
be no assurance that the Company will be successful in developing any particular
new product or, if a product is developed, that it will be profitable for the
Company.

Expand into related businesses. The Company seeks to build upon its
competency in evaluating real estate to expand its services and develop related
products. The Company has used its expertise to provide due diligence services
for institutional clients and is investigating opportunities to expand its
presence in the commercial mortgage-backed securities market. Other possible
businesses may include real estate advisory services, master servicing of
securitized loans, asset management, commercial leasing and management and the
purchase and retention of commercial mortgage-backed securities. Expansion may
occur through a combination of acquisitions, strategic alliances and internal
business development. There can be no assurance that the Company will seek to
undertake any specific line of business, or that, if it undertakes a particular
line of business, that the business will be successful.

MORTGAGE ORIGINATION

The Company's staff of 33 loan originators targets a wide variety of
borrowers including developers, local entrepreneurial owners, large portfolio
owners and public companies such as REITs. Currently, the Company originates
mortgages through two channels -- retail and wholesale. The Company directly
solicits owners of real estate, as well as local multifamily and commercial
mortgage brokers, through its loan originators based in 13 offices located
throughout the country. The Company believes that having a local presence within
a market significantly adds to its understanding of the local economic,
demographic and real estate trends, thus allowing it to serve borrowers and
investors better. A local presence also facilitates the development of borrower
relationships as well as the identification of new customers. In those markets
where the Company does not have a retail presence, it acts through a
correspondent relationship with local mortgage brokers. In this relationship, a
local commercial mortgage broker serves as a source of loans for the Company.
Currently, the Company originates loans through 65 correspondents throughout the
United States. The Company believes that multiple sourcing systems and a diverse
menu of loan products attract borrowers and helps retain their business.

In 1996, the Company obtained 64 percent of its $1.1 billion of loan
originations through correspondents. The Company's relationship with
correspondents differs between multifamily and commercial lending and FHA
lending. For multifamily and commercial lending, the Company enters into an
agreement with each correspondent which generally provides among other things
that the correspondent will (i) be paid by the borrower typically based on a
percentage of the loan, (ii) provide the Company with a right of first refusal
in certain instances to finance properties meeting the criteria of its loan
programs and investors and (iii) be eligible for incentive fees based on
servicing fees received by the Company from the originated loans. Multifamily
and commercial correspondent agreements are generally terminable by either party
without cause upon prior written notice and provide no geographic restrictions
on the part of the Company or the correspondent. With respect to FHA lending,
correspondents generally enter into agreements with the Company for each
individual transaction and the terms of the agreements vary from transaction to
transaction. These agreements define the compensation, roles, representations
and warranties for the correspondent and the Company.

Once potential borrowers have been identified, the Company determines which
of its mortgage products best meets the borrowers' needs. After identifying a
suitable product, the Company works with the borrower and a mortgage investor to
prepare a loan application. Upon acceptance by the borrower, the application is
forwarded to the Company's underwriters for due diligence or, in the case of FHA
insured loans, to the FHA, which conducts the due diligence and makes decisions
on commitments. See "-- Mortgage Underwriting." The loan is evaluated, and if
appropriate, submitted to a loan committee consisting of senior officers of the
Company. If a loan is approved, the Company issues a commitment to the borrower
and normally commits the loan for sale to an appropriate investor at the same
time. This essentially simultaneous commitment from both

36
<PAGE> 42

a borrower and a mortgage investor enables the Company to eliminate its exposure
to interest rate changes for each transaction. Typical investors include
insurance companies, banks, credit corporations, GSEs and other institutional
investors. Closing on a loan typically occurs 15 to 30 days after the Company
commits to make the loan. At the time of the closing, the Company funds the loan
using its warehouse lines of credit and the Company is paid an origination fee,
typically one percent of the principal amount of the loan, by the borrower.

Within 10 to 45 days after the closing on a loan, the Company typically
completes the sale of the loan to an investor. In connection with such sales,
the Company makes certain representations and warranties to investors covering
matters such as title to mortgaged property, lien priority, environmental
reviews and certain other matters. See "Risk Factors -- Retained Risks of
Mortgage Loans Sold." The Company bases these representations and warranties on
representations and warranties from borrowers and on independent studies from
third-party consultants. The Company may also retain certain other liabilities
with respect to loans it sells to investors, as it does under the Fannie Mae DUS
Program. See "Risk Factors -- Risk of Loss on Mortgage Loans Sold Under DUS
Program" and "Conventional Multifamily," below. After selling a mortgage loan,
the Company typically retains the right to service the loan. See "-- Mortgage
Servicing." As of December 31, 1996 and June 30, 1997 the Company held 24 and 9
mortgage loans for sale with an aggregate principal balance of $40.2 million and
$21.6 million, respectively. As of December 31, 1996 and June 30, 1997 the range
of the note rates on the mortgage loans held for sale was between 6.50% and
10.0%, and varied by product type. As of December 31, 1996 and June 30, 1997
there were no states in which the concentration of mortgage loans held for sale
was greater than 10 percent of the aggregate outstanding principal balance.
Further, as of December 31, 1996 and June 30, 1997, the Company had received
investor commitments to purchase the mortgage loans held for sale, and
subsequent to the end of each period the Company sold each of the loans.

The Company provides a diverse range of products to borrowers through three
business units: Conventional Multifamily, FHA Multifamily and Healthcare and
Commercial. The following table sets forth information regarding loan
origination volume by business unit for each of the last three years.

LOAN ORIGINATION VOLUME BY BUSINESS UNIT
(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
6 MONTHS
ENDED
JUNE 30,
1997 1996 1995 1994
-------- -------- ------ ------
<S> <C> <C> <C> <C>
Conventional Multifamily................................... $175.9 $ 505.4 $448.0 $223.3
FHA Multifamily and Healthcare............................. 344.3 505.6 325.5 252.0
Commercial................................................. 102.2 117.5 29.0 42.6
------- -------- ------ ------
Total................................................. $622.4 $1,128.5 $802.5 $517.9
======= ======== ====== ======
</TABLE>

Conventional Multifamily. This business unit originates financing for
multifamily properties that are not supported by governmental insurance or
guarantees. The Company sells such loans to a variety of mortgage investors. One
of the Company's most active conventional products is Fannie Mae's DUS Program.
Currently, there are only 26 companies approved to participate in this program.
In 1996, total DUS Program production was $4.4 billion, of which the Company
produced $281.3 million. Under the DUS Program, Fannie Mae delegates its
authority to these 26 companies to approve, close and service loans on
multifamily mortgages that meet predetermined criteria. Fannie Mae is committed
to subsequently purchase these loans from participating companies. As part of
the program, Fannie Mae requires that each company maintain a specified capital
base and share in the risk of loss on the loan. See "Risk Factors -- Risk of
Loss on Mortgage Loans Sold Under DUS Program." In return for sharing the risk
of loss, the participants receive a servicing fee that is significantly higher
than what is typically found in the industry. The Company underwrites each loan
(as described on the following pages) to manage its loss exposure and enhance
its return on servicing. See "-- Mortgage Underwriting," below.

37
<PAGE> 43

In addition to its participation in Fannie Mae's DUS Program, the Company
is a Fannie Mae Prior Approval Lender and is one of the designated post closing
review lenders for the Fannie Mae Aggregation Facility (the "Aggregation
Facility"). These programs allow the Company to sell certain loans to Fannie Mae
that it would not otherwise fund through the DUS Program. Unlike DUS, however,
neither the Prior Approval nor the Aggregation Facility requires that the
Company share in the risk of loss.

The Company is one of six multifamily mortgage companies which sell
mortgage loans to NationsBanc Capital Markets, Inc. specifically for subsequent
securitization This program was created in conjunction with the Company by
NationsBank, N.A. in 1994 when NationsBank launched its securitization efforts.
In 1996, the Company originated loans totaling $87.7 million through this
program.

FHA Multifamily and Healthcare. The Company, through WMF Huntoon Paige, is
the largest provider of FHA-insured multifamily and healthcare financing in the
country. The Company originates and services both construction and permanent
loans. In 1996, the Company acquired certain assets of ACR, the third largest
originator of FHA financing. Together, these companies originated 13.8 percent
of all FHA multifamily and healthcare insured debt financing in 1996.

The Company operates FHA lending as a separate business unit because
typical property characteristics, borrower requirements, licensing, and approval
processes differ significantly between FHA and conventional multifamily
financing. The Company, through its subsidiaries, is an FHA-approved mortgage
and, as such, must comply with the applicable requirements of the National
Housing Act and the regulations and policies of the FHA that are promulgated
pursuant to the National Housing Act. See "-- Regulations," below and "Risk
Factors -- Uncertainties Resulting from Government Regulation and Changes in
Government Programs."

Commercial. With the acquisition of Proctor in 1996 and the acquisition of
the assets of Askew in 1997, the Company has substantially increased its
presence in the market for commercial, non-multifamily financing. The Company
has originated loans for three programs that target mortgages secured by a
variety of asset classes including office buildings, retail centers, hotels,
warehouses and nursing homes. Both Proctor and Askew bring a variety of
established insurance company relationships to the Company, including: UNUM,
Canada Life, CIGNA, American General, Nationwide, Berkshire Life, Government
Personnel Mutual and Century Life. Historically, banks, insurance companies and,
more recently, conduits, have been the primary sources of capital for this
segment. Insurance companies are particularly active investors in the segment
through the regional commercial mortgage banks.

Originating and servicing commercial mortgages may be more difficult than
originating and servicing multifamily mortgages in a number of respects
including the following: (i) the Company must develop new borrower,
correspondent, and investor relationships; (ii) the commercial mortgage segment
consists of many different asset types, such as office buildings, retail
facilities, and hotels, with varying operating characteristics, whereas the
multifamily mortgage segment is more uniform with respect to asset types; and
(iii) unlike the multifamily segment, liquidity in the commercial segment does
not benefit from the involvement of GSEs and the FHA.

MORTGAGE UNDERWRITING

The Company's originators work in conjunction with underwriters whose
responsibility is to perform due diligence on all loans prior to commitment and
approval. The Company's underwriters complete a comprehensive assessment of the
proposed loan including a review of (1) borrower financial position and credit
history, (2) past operating performance of the underlying collateral, (3)
potential changes in project economics and (4) appraisal, environmental, and
engineering studies completed by a pre-approved list of third-party consultants.
Additionally, underwriters complete an independent market assessment which
includes a property inspection, review of tenant and lease files, survey of
market comparables and an analysis of area economic and demographic trends. Each
proposed loan is reviewed and approved by a loan committee consisting of the
senior officers of the Company. These executives average 18 years experience in
lending.

The Company uses underwriting guidelines provided by investors and
developed internally in its loan approval process. Key factors considered in
credit decisions include, but are not limited to, debt service

38
<PAGE> 44

coverage, loan to value ratios, property financial and operating performance,
quality of property management, borrower credit history and tenant profile. The
standards vary from investor to investor and may include a subjective element
based on the totality of circumstances relating to the credit risk and generally
do not involve mechanical application of a set formula. The Company refines its
underwriting criteria based on actual loan portfolio experience and as market
conditions and investor requirements evolve.

In 1996, these underwriting procedures contributed to the Company achieving
a loan delinquency rate (i.e., loans delinquent over 60 days) equal to only 0.75
percent of its entire conventional multifamily and commercial portfolios. For
the DUS portfolio, where the Company is exposed to potential loss sharing with
Fannie Mae, the Company has not experienced any losses or delinquencies on its
new originations since its approval as a DUS lender in 1990. During this period,
the Company originated over 175 DUS loans with original principal balances in
excess of $928 million. The Company has experienced one loss of $0.3 million on
a DUS loan. The loan was originated by another lender and the Company acquired
the risk-sharing obligation as part of its DUS approval in 1990.

The Company utilizes the underwriting criteria established by the FHA to
recommend loans for FHA insurance. The Company provides the FHA with the
requisite information necessary for its credit review. These loans are then
examined by the FHA, which makes the decision as to whether to provide
insurance.

MORTGAGE SERVICING

As a mortgage servicer, the Company performs both primary and master
servicing functions. Primary servicing involves the collection of mortgage
payments, the maintenance of escrow accounts for the payment of ad valorem taxes
and insurance premiums, the remittance of payments of principal and interest,
the reporting to investors on financial and property issues and general loan
administration. The primary servicer must inspect properties, determine the
adequacy of insurance coverage, monitor delinquent accounts and, in cases of
extreme delinquency, institute and complete either forbearance arrangements or
foreclosure proceedings on behalf of investors.

Master servicers administer and report on securitized pools of
mortgage-backed securities. Normally, the actual mortgages underlying
mortgage-backed securities are serviced by individual primary servicers. Master
servicing agreements typically provide for the primary servicer to retain
responsibility for administering the mortgage loans and the master servicer
functions as an intermediary, supervising the work of primary servicers by
monitoring their compliance with the servicing contract and consolidating all
accounting and reporting to the securities issuer.

The Company provides servicing pursuant to contracts with owners of
mortgages and originators of mortgage-backed securities. The contracts are
generally for a term equal to the term of the serviced mortgage or the
mortgage-backed security, as appropriate, except that all contracts are
terminable for cause and contracts with insurance company owners of mortgages
(amounting to approximately 18 percent of mortgages held as of December 31,
1996) are customarily terminable on 30 days notice by the owner, in many
instances without cause, subject to payments of termination fees in certain
circumstances. Pursuant to these agreements, the Company receives a fee for
primary servicing typically ranging from ten basis points to forty basis points
of the unpaid principal amount annually. Fees for master servicing typically
range from one to ten basis points of the unpaid principal balance of the loans
underlying the securities.

As of June 30, 1997, the Company acted as the primary servicer for
approximately $7.0 billion of loans and the master servicer for an additional
$476 million of loans. These loans were obtained through the Company's
origination network and through the purchase of servicing rights. A breakdown of
the servicing portfolio is shown below.

39
<PAGE> 45

SERVICING PORTFOLIO BY PRODUCT TYPE
$ IN MILLIONS

<TABLE>
<CAPTION>
6 MONTHS
ENDED
JUNE 30,
1997 1996 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
aConventional Multifamily................................ $1,851 $ 1,644 $ 1,409 $ 1,004
FHA -- Ginnie Mae....................................... 3,582 3,076 2,657 2,206
Commercial.............................................. 1,602 1,267 201 --
Master Servicing........................................ 476 214 145 368
------- ------- ------- -------
Total.............................................. $7,511 $ 6,201 $ 4,412 $ 3,578
====== ======= ======= =======
</TABLE>

The Company processes servicing transactions primarily through facilities
in Vienna, Virginia and Edison, New Jersey, and it employs approximately 52
persons in servicing capacities. As of June 30, 1997, the Company serviced 2,655
loans, each of which normally involves monthly payments for 211 investors. As
part of its servicing functions on these loans, the Company managed escrow
accounts totaling $270 million as of June 30, 1997 and processed approximately
$47 million in principal and interest payments each month. The Company
continuously reviews its servicing operations and seeks to implement
improvements in its systems and business processes.

INTEREST RATE SENSITIVITY

The Company believes that interest rate changes can affect its operating
results in a variety of ways, including impacts on origination fees, servicing
fees, placement fee income, gains on loan sales as well as its own cost of
financing. Generally, interest rate increases reduce the level of economic and
real estate activity, thereby decreasing the demand for mortgage financing,
which in turn may negatively affect the Company's ability to earn origination
fees and gains on loan sales. In addition to possibly depressing loan
origination levels, gains on loan sales may be further restricted because the
value of fixed income securities, such as many real estate mortgages, tend to
decline as interest rates increase. Finally, interest rate increases raise the
cost of debt financing, particularly if the Company finances its operations with
variable rate debt.

Interest rate increases, however, positively affect Company earnings from
loan servicing activities. A reduction in real estate activity may reduce the
risk of borrower prepayments, potentially increasing the level of servicing fees
and the value of the Company's servicing portfolio. Additionally, placement fee
income earned by the Company may benefit from increased interest rate levels.

Declines in interest rates should generally have a corresponding favorable
impact on Company earnings from originating, loan sales and financing activities
and a negative impact on servicing and placement fee income. Changes in the
relationship between short-term and long-term interest rates may also affect the
Company's results of operations. The Company earns net interest income,
typically based upon long-term rates earned on loans held between loan closing
and mortgage investor funding. Net interest income increases when long-term
rates increase relative to short-term rates and decreases when short-term rates
increase relative to long-term rates.

Although the Company believes that the interest rate environment generally
has the foregoing effects, there is no consistent correlation between interest
rate levels and either the Company's revenues or its overall profitability. In
part, this lack of correlation reflects the refinancing of existing permanent
and construction mortgages at their maturities which may occur regardless of the
interest rate environment. Additionally, approximately 50 percent of the
Company's revenues are derived from originating and approximately 50 percent of
the Company's revenues are derived from servicing activities and interest levels
have different impacts on each, as described above.

40
<PAGE> 46

REGULATION

The Company, through its subsidiaries, is an FHA-approved mortgagee and, as
such, must comply with the applicable requirements of the National Housing Act
(the "Housing Act"), and the regulations and policies of the FHA which are
promulgated pursuant to the Housing Act. The Housing Act's regulations and
policies require, among other things, the maintenance of a minimum net worth and
minimum warehouse lines of credit by each approved mortgagee, the employment of
trained personnel competent to perform their assigned responsibilities, the
submission to FHA of an annual audit report and financial statements in a form
acceptable to FHA, the maintenance and use of escrow funds in a prescribed
manner and the maintenance of a quality control plan for the underwriting,
origination and servicing of mortgage loans.

In addition to being an FHA-approved mortgagee, one of the Company's
subsidiaries is approved by Ginnie Mae as an issuer of Ginnie Mae-guaranteed
mortgage-backed securities ("Ginnie Mae MBSs"). As an approved issuer of Ginnie
Mae MBSs, the Company must comply with the eligibility requirements of Ginnie
Mae which, among other things, mandate that the subsidiary be an FHA-approved
mortgagee in good standing, that it be a Fannie Mae- or Ginnie Mae-approved
mortgage servicer in good standing, and that it maintain a minimum net worth in
assets acceptable to Ginnie Mae in an indexed amount which is related by Ginnie
Mae policy to the amount of Ginnie Mae MBSs which the Company has issued.

As a mortgage banker engaged on a national level, the Company must comply
with the laws of the various states which may be applicable to the activities of
mortgage bankers within each respective state. These laws may require
authorizations or licenses to conduct business in a state.

Although the Company believes that it is in compliance in all material
respects with applicable laws relating to FHA and Ginnie Mae requirements, and
with applicable laws of the various jurisdictions in the United States, there
can be no assurance that laws will not be adopted in the future that could make
compliance more difficult or expensive, restrict the Company's ability to
originate, sell, purchase, broker or service mortgage loans or Ginnie Mae MBSs,
limit or restrict the amount of interest and other charges earned on mortgage
loans or Ginnie Mae MBSs originated, sold, purchased or serviced by the Company,
or otherwise adversely affect the business or prospects of the Company. If the
Company were unable to comply with the laws, or were found to be in violation of
law, the Company could lose the opportunity to originate, sell, purchase, broker
or service mortgage loans or Ginnie Mae MBSs generally, or in the applicable
jurisdiction, and could be compelled to forfeit or forgo revenues earned on
transactions which were determined by FHA, Ginnie Mae or the authorities in a
particular jurisdiction, as applicable, to be in violation of law or engaged in
by the Company in violation of law, and it and certain of its officers could be
subject to fines and other penalties, including restrictions on or prohibition
from doing future business with FHA or Ginnie Mae, or in the jurisdiction. The
inability of, or restrictions on the ability of, the Company to originate, sell,
purchase or service mortgage loans or Ginnie Mae MBSs could have a material
adverse effect on the Company.

In addition to legal requirements with which they must comply, the
Company's arrangements with investors (including Fannie Mae) require the Company
to comply with certain standards including among other things, minimum net worth
requirements, minimum liquid reserves, underwriting guidelines, servicing
systems and controls, experienced personnel and minimum requirements with
respect to errors and omissions and fidelity insurance.

There can be no assurance that requirements will not be adopted in the
future that could make compliance more difficult or expensive, restrict the
Company's ability to originate, sell, purchase or service mortgage loans, limit
or restrict the amount of interest and other charges earned on mortgage loans
originated, purchased or serviced by the Company, or otherwise adversely affect
the business or prospects of the Company. If the Company were unable to comply
with the requirements, or were found to be in violation of any of the
requirements, the Company could lose the opportunity to originate and sell, or
broker, and service mortgage loans for Fannie Mae or any other investor, and
could be compelled to forfeit or forgo revenues earned on transactions with
respect to which the actions of the respective corporation were determined to be
not in compliance with the applicable contract with Fannie Mae or other
investor. The inability of the Company to originate and sell, or broker, and
service mortgage loans with respect to Fannie Mae or any particular investor
could have a material adverse effect on the Company.

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<PAGE> 47

COMPETITION

The Company's competition varies by geographic market. Generally,
competition is fragmented with very few national competitors, and many local and
regional competitors. In addition, the Company's business is characterized by
low barriers to entry, and new competitors have recently been successful in
raising the capital necessary to enter the business. Moreover, certain of the
Company's competitors are larger and have greater financial resources than the
Company, including the commercial mortgage banking arms of General Motors,
General Electric, Mellon Bank, Banc One and CB Commercial. The Company competes
largely on the basis of its experience in purchasing and servicing mortgages
supported by various government guarantees, and on its ability to respond
promptly to changing market conditions. Although management believes that the
Company is well positioned to continue to compete effectively in the multifamily
and commercial mortgage banking businesses, there can be no assurance that it
will do so or that the Company will not encounter further increased competition
in the future which could limit its ability to maintain or increase its market
share.

LEGAL PROCEEDINGS

The Company is involved from time to time in legal proceedings arising in
the ordinary course of business. In connection with the Company's loan servicing
activities, the Company is indemnified to varying degrees by the party on whose
behalf the Company is acting. The Company also maintains insurance that
management believes is adequate for the Company's operations. None of the legal
proceedings in which the Company is currently involved, either individually or
in the aggregate (and after consideration of available indemnities and
insurance), is expected to have a material adverse effect on the Company's
business or financial condition; however, any claims asserted in the future may
result in legal expenses or liabilities which could have a material adverse
effect on the Company's business or financial condition.

EMPLOYEES

At June 30, 1997, the Company employed 223 persons. Most of these people
work in professional, administrative and technical positions and no employee is
represented by a labor union or subject to a collective bargaining agreement.
The Company believes that its employee relations are generally good.

PROPERTIES

The Company's headquarters are currently located in Vienna, Virginia where
the Company leases approximately 28,559 square feet of office space under a
lease expiring on December 31, 2000. Additional corporate offices are located in
Edison, New Jersey, where the Company leases approximately 15,206 square feet of
office space under a lease expiring on May 1, 2005. In addition to its offices
in Vienna and Edison, the Company has nine offices located throughout the United
States.

42
<PAGE> 48

MANAGEMENT OF THE COMPANY

DIRECTORS AND EXECUTIVE OFFICERS

As of the Maturity Time, it is anticipated that the directors and executive
officers of the Company will be as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------- --- ------------------------------------------------------
<S> <C> <C>
J. Roderick Heller, III................ 59 Chairman of the Board
Shekar Narasimhan...................... 44 Director, President and Chief Executive Officer
Mohammed A. Al-Tuwaijri................ 41 Director
Michael R. Eisenson.................... 42 Director
Tim R. Palmer.......................... 39 Director
John D. Reilly......................... 54 Director
Herbert S. Winokur, Jr................. 53 Director
James L. Clouser....................... 55 Executive Vice President
Michael D. Ketcham..................... 39 Executive Vice President, Chief Financial Officer and
Treasurer
Douglas J. Moritz...................... 47 Executive Vice President
Howard S. Perkins...................... 48 Executive Vice President
Clarke B. Welburn...................... 48 Executive Vice President
Joan C. May............................ 39 Senior Vice President
Elizabeth Whitbred-Snyder.............. 43 Senior Vice President
</TABLE>

J. Roderick Heller, III has served as Chairman of the Board since 1996. He
has served as a Director, President and Chief Executive Officer of NHP since its
organization in 1986 and has served as Chairman of NHP's Board since 1988. From
1982 until 1985, Mr. Heller served as President and Chief Executive Officer of
Bristol Compressors, Inc., a Bristol, Virginia-based company involved in the
manufacturing of air conditioning compressors. From 1971 until 1982, he was a
partner in the Washington, D.C. law firm of Wilmer, Cutler & Pickering. Mr.
Heller is a director of Auto-Trol Technology Corporation and Community First
Bank, N.A. Mr. Heller is also Chairman of public television station WETA and is
trustee of numerous housing related and other non-profit institutions.

Shekar Narasimhan has served as a director, President and Chief Executive
Officer of the Company since 1992 and as Director, President and Chief Executive
Officer of Washington Mortgage since its incorporation. He has also served as an
Executive Vice President of NHP since 1996. Mr. Narasimhan has 18 years of
experience in property management and real estate mortgage finance, primarily
for multi-family properties. He has been a member of the Board of Governors of
the MBA since 1995 and was the 1996 recipient of the MBA's Burton C. Wood
Legislative Service Award.

Mohammed A. Al-Tuwaijri has served as a director of the Company since 1992.
He also served as a director of the Company's subsidiaries, Washington Mortgage
and WMF Huntoon Paige from 1991 to 1996. Mr. Al-Tuwaijri has been President of
Dar Al-Majd Consulting Engineers since 1981.

Michael R. Eisenson will serve as a director of the Company as of the
Maturity Time. He also served as a director of NHP from 1990 until May 1997. Mr.
Eisenson is the President and Chief Executive Officer of Harvard Private Capital
Group, Inc. ("Harvard Capital"), which manages the private equities and real
estate portfolios of the Harvard University endowment fund, and which Mr.
Eisenson joined in 1986. Harvard Capital is the investment advisor for Demeter.
Mr. Eisenson is a director of Harken Energy Corporation, ImmunoGen, Inc.,
Playtex Products, Inc., and United Auto Group, Inc.

Tim R. Palmer has served as a director of the Company since 1996. He also
served as a director of NHP from 1990 until May 1997. Mr. Palmer is a Managing
Director of Harvard Capital, which he joined in 1990. From 1987 to 1990, Mr.
Palmer was Manager, Business Development, at The Field Corporation, a private
investment firm.

43
<PAGE> 49

John D. Reilly has served as a director of the Company since 1996. He is
President of Reilly Investment Corporation, a real estate investment company,
and from 1991 through 1994 he was Executive Director of Reilly Mortgage Group,
Inc., a mortgage banking and servicing company. Mr. Reilly serves as a director
of Allied Capital Commercial Corporation and Allied Capital Corporation II.

Herbert S. Winokur, Jr. is expected to serve as a director of the Company
as of or shortly after the Maturity Time. He also served as a director of NHP
from 1991 until May 1997. Since 1987, he has served as the President of Winokur
& Associates, Inc., an investment and management services firm, and Winokur
Holdings, Inc., which is the managing general partner of Capricorn, a private
investment partnership. Mr. Winokur is also the manager of Capricorn Holdings
LLC, which is the general partner of Capricorn II, a separate investment
partnership. Mr. Winokur serves as a director of DynCorp, Enron Corporation and
NacRe Corporation.

James L. Clouser will serve as Executive Vice President of the Company as
of the Maturity Time. He joined WMF Huntoon Paige in 1979 and has been President
since 1989. Mr. Clouser has 22 years of real estate finance experience. He is
active in the MBA and sits on the Insured Project and Income Producing Loan
Subcommittee. Mr. Clouser is a regular speaker at MBA seminars and conventions
and was contributing editor to the MBA Servicing Handbook.

Michael D. Ketcham will serve as Executive Vice President, Chief Financial
Officer and Treasurer of the Company as of the Maturity Time. He has served as
Senior Vice President and Treasurer of the Company since 1996. Mr. Ketcham has
also served as Executive Vice President Operations, Chief Financial Officer and
Treasurer of Washington Mortgage since 1996. Prior to joining the Company, Mr.
Ketcham served as Vice President of Corporate Financial Planning at Marriott
Corporation and one of its successor companies, Marriott International, from
1992 to 1994 and Vice President Treasury at Marriott International from 1994 to
1996. Mr. Ketcham joined Marriott Corporation in 1986. He has 15 years of
corporate finance experience.

Douglas J. Moritz will serve as Executive Vice President of the Company as
of the Maturity Time. He currently serves as Executive Vice President,
Multifamily/Conventional of Washington Mortgage. Mr. Moritz joined Washington
Mortgage in 1988, serving as Executive Vice President, Lending from 1990 to
1996. Mr. Moritz has 25 years of experience in the multifamily industry, with 14
years of experience in multifamily finance. He has served on the Board of
Governors of the Mortgage Bankers Association of Metropolitan Washington, Inc.
since 1993, was the Chairman of the Income Property Committee in 1995 and 1996
and currently serves as the Association's President. Mr. Moritz has been a
member of the Fannie Mae DUS Lenders' Advisory Council since 1996.

Howard S. Perkins will serve as Executive Vice President of the Company as
of the Maturity Time. He currently serves as Executive Vice President,
Commercial Mortgage Finance for Washington Mortgage. From 1990 to 1996, he
served as Executive Vice President, Chief Financial Officer and Treasurer of
Washington Mortgage. Mr. Perkins joined Washington Mortgage in 1987. He has 19
years of lending experience.

Clarke B. Welburn will serve as Executive Vice President of the Company as
of the Maturity Time. He currently serves as Executive Vice President, Risk
Management for Washington Mortgage. From 1990 to 1996, he served as Executive
Vice President, Credit Policy for Washington Mortgage. Mr. Welburn joined
Washington Mortgage in 1988. Mr. Welburn has 25 years of lending experience.

Joan C. May will serve as Senior Vice President of the Company as of the
Maturity Time. Since 1992, she has served as Senior Vice President, Chief
Underwriter of Washington Mortgage. Ms. May joined Washington Mortgage in 1989,
serving as Vice President, Underwriting from 1990 to 1992. She has 13 years of
real estate lending experience.

Elizabeth Whitbred-Snyder, CPA, will serve as Senior Vice President of the
Company as of the Maturity Time. She has served as Senior Vice President of
Washington Mortgage since 1992 and Controller since 1990. From 1990 to 1992, Ms.
Whitbred-Snyder served as Vice President of Washington Mortgage. She has 12
years of financial services experience.

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<PAGE> 50

Directors are elected for one year terms and hold office until their
successors have been elected and qualified or until such director's earlier
resignation or removal. Executive officers are elected annually and hold office
until the next annual meeting of stockholders or until such executive officer's
earlier resignation or removal.

The Board of Directors has created an Audit Committee which, after the
Share Distribution, is expected to consist of Messrs. Reilly, Al-Tuwaijri and
Palmer. The Audit Committee is charged with reviewing the Company's annual audit
and meeting with the Company's independent accountants to review the Company's
internal controls and financial management practices.

The Board of Directors has created a Compensation Committee which, after
the Share Distribution, is expected to consist of Messrs. Eisenson, Winokur and
Heller. The Compensation Committee is charged with making recommendations to the
Board of Directors regarding the compensation of executive officers of the
Company and administering any stock option plan the Company may adopt.

EXECUTIVE COMPENSATION

The following table sets forth information with respect to the compensation
paid by the Company for services rendered during the year ended December 31,
1996 to the Chief Executive Officer and to each of the four other most highly
compensated executive officers of the Company (the "Named Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM
---------------------------- COMPENSATION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS(#)(2) COMPENSATION(3)
- -------------------------------------- ---- -------- -------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Shekar Narasimhan..................... 1996 $240,000 $110,000 26,666 $ 6,533
President and Chief Executive
Officer
Howard S. Perkins..................... 1996 195,000 70,000 6,666 2,730
Executive Vice President
Douglas J. Moritz..................... 1996 165,000 70,000 6,666 5,675
Executive Vice President
James L. Clouser...................... 1996 145,000 70,000 5,000 15,431
Executive Vice President
Clarke B. Welburn..................... 1996 155,000 50,000 6,666 5,626
Executive Vice President
</TABLE>

- ---------------
(1) The amounts reported were paid in 1997 with respect to the year ended
December 31, 1996.

(2) All options were granted as options to acquire NHP Common Stock and are
being converted into options to acquire shares of NHP Common Stock and
options to acquire shares of Company Common Stock in connection with the
Share Distribution.

(3) These amounts represent the Company's payment of life insurance premiums and
matching contributions to the Company's 401(k) Retirement Plan.

The following table sets forth certain information regarding options
granted to the Named Officers during the year ended December 31, 1996. All
options were granted by NHP as options to acquire NHP Common Stock and will be
converted into options to acquire shares of NHP Common Stock and shares of
Company Common Stock in connection with the Share Distribution. See "The
Distribution of Company Common Stock -- Effect on Outstanding NHP Options."

45
<PAGE> 51

OPTIONS GRANTED IN 1996

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
PERCENT OF APPRECIATION FOR
TOTAL OPTIONS OPTION TERM
OPTIONS GRANTED IN EXERCISE EXPIRATION ----------------------
NAME GRANTED(#) FISCAL YEAR PRICE($/SH)(1) DATE 5%($) 10%($)
- --------------------------- ---------- ------------- -------------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shekar Narasimhan.......... 26,666 16.20% $ 5.19 3/31/06 $ 87,037 $ 220,568
Howard S. Perkins.......... 6,666 4.05 5.19 3/31/06 21,758 55,138
Douglas J. Moritz.......... 6,666 4.05 5.19 3/31/06 21,758 55,138
James L. Clouser........... 5,000 3.04 5.19 3/31/06 16,320 41,358
Clarke B. Welburn.......... 6,666 4.05 5.19 3/31/06 21,758 55,138
</TABLE>

- ---------------
(1) The Exercise Price of Options for shares of Company Common Stock will depend
on the allocation of the exercise price on existing options for NHP Common
Stock between Company options and NHP options, which determination will be
made at the time of the Share Distribution based on the fair value of shares
of the Company Common Stock and NHP Common Stock at such time. See "The
Distribution -- Effect on Outstanding NHP Options." For purposes of this
table, the fair value of NHP Common Stock is assumed to be equal to the
market value of shares of AIMCO Common Stock on May 9, 1997 times .74766,
the exchange ratio in the Merger, and the fair value of Company Common Stock
is assumed to be equal to three times the difference between the market
value of NHP Common Stock on May 9, 1997 and the assumed value of NHP Common
Stock as determined above.

The following table sets forth certain information regarding unexercised
options held by the Named Officers at December 31, 1996. All options were
granted by NHP as options to acquire NHP Common Stock and are being converted
into options to acquire shares of NHP Common Stock and shares of Company Common
Stock in connection with the Share Distribution. See "The Distribution of
Company Common Stock -- Effect on Outstanding NHP Options." No options were
exercised by the Named Officers during the year ended December 31, 1996.

AGGREGATED OPTION EXERCISES IN 1996
AND YEAR-END 1996 OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN THE MONEY OPTIONS
DECEMBER 31, 1996 AT DECEMBER 31, 1996
--------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---------------------------------------- ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Shekar Narasimhan....................... 0 26,666 $ 0 $ 105,597
Howard S. Perkins....................... 0 6,666 0 26,397
Douglas J. Moritz....................... 0 6,666 0 26,397
James L. Clouser........................ 0 5,000 0 19,800
Clarke B. Welburn....................... 0 6,666 0 26,397
</TABLE>

DIRECTORS COMPENSATION

Non-management directors will be granted options to purchase 5,000 shares
per year of Company Common Stock for their services as directors. The options
will vest six months after grant and will be exercisable for ten years at a
price equal to the market price on the date of issuance. Options for 1997 will
be issued concurrent with the Share Distribution at an exercise price of $9.15.
Non-management directors will also be reimbursed for all out-of-pocket expenses
related to their service as directors. The Chairman of the Board will receive
compensation in the amount of $50,000 per year for his service as Chairman.

46
<PAGE> 52

EMPLOYMENT CONTRACTS AND RELATED MATTERS

Although none of the Named Officers will have employment contracts with the
Company after the Share Distribution, the Company expects to provide certain
severance arrangements for its Chief Executive Officer ("CEO"), Executive Vice
Presidents ("EVP"), Senior Vice Presidents ("SVP") and Group Vice Presidents
("GVP"). If such an employee is terminated without "cause" (as defined below),
he will be paid his then current salary for two years if he is the CEO, for one
year if he is an EVP, for six months if he is a SVP or for three months if he is
a GVP. If there is a "transfer of control" of the Company (as defined below) and
such an employee is terminated within 180 days of such change, he will be paid
his then current salary for three years if he is the CEO, for two years if he is
an EVP, for one year if he is a SVP or for six months if he is a GVP. The
Company expects to require each of the CEO, EVPs, SVPs and GVPs to agree to
refrain from competing in the business of mortgage origination and servicing
during his employment with the Company and for the greater of one year or the
period during which such employee is receiving severance benefits. In addition,
the Company expects to require such officers to agree to refrain from disclosing
confidential information about the Company during their employment and
indefinitely thereafter. For purposes of the severance arrangements, "cause"
will be defined as (i) the engaging by the employee in any act of dishonesty in
connection with the performance of his employment duties and responsibilities,
(ii) the conviction of the employee of a felony, (iii) the failure of the
employee to perform his duties or responsibilities, or (iv) the inability of the
employee to perform his duties or responsibilities for a period of more than 120
consecutive days due to physical or mental illness or incapacity. For purposes
of the severance arrangements, "transfer of control" will be defined as (i) a
transfer of a majority of the Company's voting stock outstanding on the day of
the transfer, (ii) a sale of substantially all of the Company's assets to any
entity or person unaffiliated with the Company, (iii) the consolidation of the
Company with or its merger into any unaffiliated corporation or (iv) the
dissolution of the Company.

Each of the CEO, EVPs, SVPs and GVPs will be entitled to participate in a
Key Employee Incentive Plan the Company has adopted ("KEIP"). Options awarded
pursuant to the KEIP will be exercisable for ten years at a price equal to the
market price on the date of issuance. Options for 1997 will be issued
concurrently with the Share Distribution at an exercise price of $9.15. Such
options will vest ratably over five years, but will be immediately vested upon a
change of control of the Company (as defined in the KEIP). If an employee is
terminated by the Company without cause (as defined in the KEIP), his options
will vest immediately and will expire 90 days after such termination. Effective
as of the Maturity Time, options will be granted to Mr. Narasimhan for 84,000
shares and to each of Messrs. Perkins, Moritz, Clouser and Welburn for 21,000
shares. The Company also adopted a Deferred Compensation Plan (the "DCP") that
will provide certain eligible employees an opportunity to defer receipt of a
portion of their compensation, which then may be converted into an equity
interest in the Company under the DCP.

Pursuant to a letter agreement with the Company, Mr. Ketcham receives a
current annual base salary of $175,000, which will increase by a minimum of
$10,000 in 1998. In 1996, under the letter agreement, Mr. Ketcham received a
bonus of $70,000, and is eligible for a cash incentive bonus in 1997 of zero
percent to 100 percent of his salary. Pursuant to this letter agreement, NHP
granted Mr. Ketcham options to acquire 25,000 shares of NHP Common Stock (which
will be converted into options to acquire 25,000 shares of NHP Common Stock and
8,333 shares of Company Common Stock in connection with the Share Distribution).
Mr. Ketcham also is eligible for options under the KEIP described above and
severence pay under the letter agreement.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Board of Directors has created a Compensation Committee which, after
the Share Distribution, is expected to consist of Messrs. Eisenson, Winokur and
Heller. The Compensation Committee is charged with determining the compensation
of all executive officers. No member of the Compensation Committee has ever been
an officer of the Company or any of its subsidiaries.

47
<PAGE> 53

RELATED PARTY TRANSACTIONS

Since December 31, 1993, the Company has engaged in the following
transactions with persons who are, or are members of the immediate family of,
directors, persons expected to become a director, officers or beneficial owners
of 5 percent or more of the Company Common Stock issued and outstanding, or with
entities in which such persons or certain of their relatives have interests.

Prior to the Share Distribution, the Company will be a wholly-owned
subsidiary of NHP. Mr. Heller is, and prior to May 6, 1997, Messrs. Palmer and
Winokur were directors of both the Company and NHP and Mr. Heller is President
and Chief Executive Officer of NHP and Chairman of the Company. Following the
Share Distribution, Messrs. Heller, Palmer and Winokur -- as well as Mr.
Eisenson (who was a director of NHP until May 6, 1997) -- will serve as
directors of the Company. As of July 1, 1997, the Company owed NHP approximately
$8 million as a result of loans made by NHP to the Company to fund the
acquisition of Proctor and Askew. As of December 31, 1996, the Company also owed
NHP approximately $900,000 in respect of taxes paid by NHP on the Company's
behalf. These amounts, net of any cumulative free cash flow produced by NHP
between February 1, 1997 and the Effective Time of the Merger, are being repaid
in connection with the Share Distribution. See "Arrangements Between NHP and the
Company After the Share Distribution."

In addition, following the Share Distribution the Company will have certain
other arrangements with NHP as described above in "Arrangements Between NHP and
the Company After the Share Distribution."

48
<PAGE> 54

PRINCIPAL STOCKHOLDERS OF THE COMPANY

The following table sets forth the number and percentage of outstanding
shares of the Company's Common Stock which are expected to be beneficially owned
by (i) all persons known by the Company to own beneficially more than 5 percent
of the Company's Common Stock, (ii) each director and each Named Officer who is
a stockholder, and (iii) all directors and executive officers as a group. The
table reflects shares of NHP Common Stock owned as of October 1, 1997, plus the
546,448 shares of newly issued Company Common Stock proposed to be purchased by
Capricorn II at the time of the Share Distribution, except for shares of NHP
Common Stock beneficially owned by AIMCO that were acquired pursuant to the
Stock Purchase Agreement. AIMCO has agreed to hold all Rights distributed with
respect to such shares in trust for Demeter and Capricorn and certain assignees
of Capricorn and deliver to them the shares of Company Common Stock AIMCO would
be entitled to receive in the Share Distribution. Accordingly, the table
reflects the shares Demeter and Capricorn will receive in respect of Rights held
by AIMCO. Except as otherwise indicated, the business address of each of the
following is 1593 Spring Hill Road, Suite 400, Vienna, VA 22182.

Capricorn Investors, L.P. (1).......................................... 420,615 8.6%
30 East Elm Street
Greenwich, CT 06830

Capricorn Investors II, L.P............................................ 546,448 11.2%
30 East Elm Street
Greenwich, CT 06830

Warburg, Pincus Counsellors, Inc....................................... 508,166 10.4%
466 Lexington Ave.
New York, NY 10017

Wallace R. Weitz & Company............................................. 246,666 5.1%
1125 South 103rd Street
Omaha, NE 68124

J. Roderick Heller, III (2)............................................ 204,166 4.1%
8065 Leesburg Pike
Vienna, VA 22182
Shekar Narasimhan (3).................................................. 96,666 2.0%

Mohammed A. Al-Tuwaijri (4)............................................ 70,000 1.4%
P.O. Box 60212
Tamaneen Street
Riyadh 11545
Saudi Arabia

Michael R. Eisenson (5)................................................ 1,873,231 38.4%
600 Atlantic Ave.
Boston, MA 02210

Tim R. Palmer (5)...................................................... 1,873,231 38.4%
600 Atlantic Ave.
Boston, MA 02210

Herbert S. Winokur, Jr. (6)............................................ 967,063 19.8%
30 East Elm Street
Greenwich, CT 06830
</TABLE>

49
<PAGE> 55

<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
- ----------------------------------------------------------------------- --------- -------
<S> <C> <C>
John D. Reilly......................................................... 33 *
5335 Wisconsin Avenue, N.W. #440
Washington, D.C. 20015
James L. Clouser (7)................................................... 5,000 *
379 Thornall Street, 10th Floor
Edison, NJ 08837
Douglas J. Moritz (8).................................................. 6,666 *
Howard S. Perkins (9).................................................. 6,666 *
Clarke B. Welburn (10)................................................. 6,666 *
Michael D. Ketcham (11)................................................ 8,333 *
All directors and executive officers as a group (12 persons)........... 3,174,490 62.7%
</TABLE>

- ------------------
* Less than 1%

(1) The Company understands that Capricorn intends to distribute all of its
shares of Company Common Stock to its partners in the Capricorn
Distribution promptly following the Share Distribution.

(2) Includes 125,416 shares subject to options that are exercisable currently
or within 60 days of the date of this Information Statement/Prospectus and
33,750 shares held in trusts for the benefit of Mr. Heller's children. Mr.
Heller disclaims beneficial ownership of the shares held in these trusts.
The total excludes shares Mr. Heller has the right to acquire pursuant to a
performance vesting option.

(3) Includes 26,666 shares subject to options that are exercisable currently or
within 60 days of the date of this Information Statement/Prospectus. On
September 30, 1996, Mr. Narasimhan acquired 8% of the common stock of
Commonwealth Overseas Trading Company Limited ("Commonwealth"), which owns
210,000 shares of NHP Common Stock. Pursuant to an agreement with Mr.
Al-Tuwaijri, the other owner of Commonwealth, Mr. Narasimhan shares power
to vote all shares of NHP Common Stock held by Commonwealth. Therefore, Mr.
Narasimhan has indirect interest in all 210,000 shares of NHP Common Stock
which is included in the total. Of these shares, 105,000 are in escrow and
are currently held subject to reduction under certain circumstances.

(4) Mr. Al-Tuwaijri owns 92% of the common stock of Commonwealth, which owns
210,000 shares of NHP Common Stock. Pursuant to an agreement with Mr.
Narasimhan, the other owner of Commonwealth, Mr. Al-Tuwaijri shares power
to vote all of the shares of the NHP Common Stock held by Commonwealth.
Therefore, Mr. Al-Tuwaijri has indirect interest in all 210,000 shares of
NHP Common Stock which is included in this total. Of these shares, 105,000
are held in escrow and are currently held subject to reductions under
certain circumstances.

(5) Includes all shares held by Demeter Holdings Corporation. Messrs. Eisenson
and Palmer disclaim beneficial ownership of all the shares held by Demeter.

(6) Includes all shares held by Capricorn and Capricorn II. Mr. Winokur
disclaims beneficial ownership of all shares held by Capricorn and
Capricorn II, and Capricorn and Capricorn II each disclaims beneficial
ownership of the shares held by the other. The Company understands that
Capricorn intends to distribute all of its shares of the Company to its
partners in the Capricorn Distribution promptly following the Share
Distribution.

(7) Includes 5,000 shares subject to options that are exercisable currently or
within 60 days of the date of the Information Statement/Prospectus.

(8) Includes 6,666 shares subject to options that are exercisable currently or
within 60 days of the date of the Information Statement/Prospectus.

(9) Includes 6,666 shares subject to options that are exercisable currently or
within 60 days of the date of the Information Statement/Prospectus.

(10) Includes 6,666 shares subject to options that are exercisable currently or
within 60 days of the date of the Information Statement/Prospectus.

(11) Includes 8,333 shares subject to options that are exercisable currently or
within 60 days of the date of the Information Statement/Prospectus.

50
<PAGE> 56

DESCRIPTION OF THE COMPANY CAPITAL STOCK

GENERAL

At the Maturity Time, the authorized capital stock of the Company will
consist of 25,000,000 shares of Company Common Stock, $.01 par value, of which
up to 4,602,730 shares are expected to be issued and outstanding immediately
prior to the Share Distribution and the Capricorn Transaction, and 12,500,000
shares of Preferred Stock, $.01 par value, none of which are expected to be
outstanding.

COMMON STOCK

Holders of shares of Company Common Stock are entitled to one vote at all
meetings of shareholders for each share held and are not entitled to cumulative
voting. Holders of Company Common Stock have no preemptive rights and have no
other rights to subscribe for additional shares of the Company, nor does the
Company Common Stock have any conversion rights or rights of redemption. Holders
of Company Common Stock are entitled to share ratably in such dividends as may
be declared by the Board of Directors out of assets legally available therefor.
Upon liquidation, all holders of Company Common Stock are entitled to
participate ratably and equally in the assets and funds of the Company available
for distribution. All of the outstanding shares of Company Common Stock are, and
the shares to be issued pursuant to this offering will be, when issued, fully
paid and nonassessable.

PREFERRED STOCK

The Board of Directors is authorized, subject to any limitations prescribed
by law, from time to time to issue up to an aggregate of 12,500,000 shares of
Preferred Stock with such powers, designations, preferences and relative,
participating, option or other special rights and such qualifications,
limitations or restrictions thereof, as shall be determined by the Board of
Directors in a resolution or resolutions providing for the issue of such
Preferred Stock. Thus, any series may, if so determined by the Board of
Directors, have full voting rights with the Company Common Stock or superior or
limited voting rights, be convertible into Company Common Stock or another
security of the Company, and have such other preferences, relative rights, and
limitations as the Company's Board of Directors shall determine. As a result,
any series of Preferred Stock could have rights which would adversely affect the
voting power of the Company Common Stock. The shares of any class or series of
Preferred Stock need not be identical. The issuance of the Preferred Stock could
have the effect of delaying or preventing a change of control of the Company
without any further action by shareholders. The Company has no present intention
to issue any Preferred Stock.

DIRECTOR AND OFFICER LIABILITY

The Certificate of Incorporation includes a provision which eliminates the
personal liability of the Company's directors and officers for monetary damages
resulting from breaches of their fiduciary duty, provided that such provision
does not eliminate liability for breaches of the duty of loyalty, acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, violations of Section 174 of the General Corporation Law of
the State of Delaware (the "GCL"), or for any transaction from which the
director derived an improper personal benefit. If the GCL is amended to further
permit limitations on the liability of directors, then the Certificate of
Incorporation shall be read to eliminate personal liability of the director to
the fullest extent permitted by law. This provision does not limit or eliminate
the right of the Company or any stockholder to seek non-monetary relief such as
rescission in the event of a breach of a director's duty of care. The By-Laws of
the Company also provide that the Company shall indemnify its directors and
officers for all expenses actually incurred in the defense of actions against
them in their capacity as directors or officers unless the action results in a
finding that indemnification is not proper in the circumstances because such
person has not met the standard of conduct for such indemnification established
by applicable law. The Company believes that these provisions are necessary to
attract and retain qualified persons as directors and officers.

51
<PAGE> 57

CERTAIN PROVISIONS AFFECTING STOCKHOLDERS

Under the business combination provision contained in Section 203 of the
GCL ("Section 203"), a Delaware corporation may not engage in any business
combination with any interested stockholder for a period of three years
following the date such stockholder became an interested stockholder, unless (i)
prior to such date the board of directors of the corporation approved either the
business combination or the transaction which resulted in the stockholder
becoming an interested stockholder, (ii) upon consummation of the transaction
which resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85 percent of the voting stock of the
corporation outstanding at the time the transaction commenced (excluding for
determining the number of shares outstanding (a) shares owned by persons who are
directors and officers and (b) employee stock plans, in certain instances), or
(iii) on or subsequent to such date the business combination is approved by the
board of directors and authorized at an annual or special meeting of the
stockholders by at least 66 percent of the affirmative voting stock that is not
owned by the interested stockholder. An interested stockholder is defined in
Section 203 as any person who (i) owns, directly or indirectly, 15 percent or
more of the outstanding voting stock of a corporation or (ii) is an affiliate or
associate of a corporation and was the owner of 15 percent or more of the
outstanding voting stock at any time within the three-year period immediately
prior to the date on which it is sought to be determined whether such person is
an interested stockholder; and the affiliates and the associates of such person.
The restrictions imposed by Section 203 will not apply to a corporation if (i)
the corporation's original certificate of incorporation contains a provision
expressly electing not to be governed by this section; and (ii) the corporation
by the action of its stockholders holding a majority of the outstanding voting
stock adopts an amendment to its certificate of incorporation or by-laws
expressly electing not to be governed by Section 203 (such amendment will not be
effective until 12 months after adoption and shall not apply to any business
combination between such corporation and any person who became an interested
stockholder of such corporation on or prior to such adoption).

On October 14, 1997, the Company's Board of Directors passed a resolution
approving an amendment to the Company's Restated Certificate of Incorporation
which provides that Section 203 shall not apply to the Company. On the same day,
NHP, as the sole shareholder of WMF Common Stock, consented to the amendment
which was to become effective immediately, or as soon as possible under Section
203. Moreover, the restrictions under Section 203 would not apply to any
business combination with Capricorn II because the Company's board of directors
has approved the acquisition by Capricorn II of shares of Company Common Stock
which, when taken together with the shares of Company Common Stock expected to
be owned by Capricorn at the closing of such acquisition, exceeds 15% of the
shares of Company Common Stock.

TRANSFER AGENT AND REGISTRAR

BankBoston, N.A. will serve as transfer agent and registrar of the Company
Common Stock.

INDEPENDENT PUBLIC ACCOUNTANTS

Prior to the acquisition of the Company by NHP, the Company's accountants
were KPMG Peat Marwick LLP. In July 1996 Arthur Andersen LLP, NHP's accountants,
were retained as accountants for the Company. During the Company's two most
recent fiscal years and during the subsequent interim period preceding the date
of retention of Arthur Andersen LLP, there were no disagreements on any matter
of accounting principles or practices, financial statement disclosure or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of KPMG Peat Marwick LLP, would have caused it to make reference to
the subject matter of the disagreement in connection with their report. The
report of KPMG Peat Marwick LLP on the Company's financial statements for the
years ended December 31, 1995 and 1994 were unqualified. Prior to the retention
of Arthur Andersen LLP, neither the Company nor anyone on the Company's behalf
consulted Arthur Andersen LLP regarding either the application of accounting
principles related to a specified transaction, completed or proposed, or the
type of audit opinion that might be rendered on the Company's financial
statements.

52
<PAGE> 58

LEGAL MATTERS

The validity of the shares of Company Common Stock and certain tax matters
relating to the Distribution will be passed upon on behalf of the Company and
NHP by Wilmer, Cutler & Pickering of Washington, D.C.

53
<PAGE> 59

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE WMF GROUP, LTD. AND SUBSIDIARY (FORMERLY NHP FINANCIAL SERVICES, LTD., AND
SUBSIDIARY, AND FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

Report of Independent Public Accountants

As of and for the Year Ended December 31, 1996, and
As of and for the Three Months Ended March 31, 1996.............................. F-1

Report of Independent Public Accountants
As of December 31, 1995, and
For the Years Ended December 31, 1995 and 1994................................... F-2

Consolidated Balance Sheets
As of June 30, 1997 (unaudited), December 31, 1996, March 31, 1996,
and December 31, 1995............................................................ F-3

Consolidated Statements of Operations
The Period January 1, 1997 to June 30, 1997 (unaudited),
The Period April 1, 1996 to June 30, 1996 (unaudited),
Pro Forma for the Year Ended December 31, 1996 (unaudited),
The Period April 1, 1996, to December 31, 1996,
The Period January 1, 1996, to March 31, 1996, and
The Years Ended December 31, 1995 and 1994....................................... F-4

Consolidated Statements of Stockholder's Equity
For the Period January 1, 1997 to June 30, 1997 (unaudited),
The Period April 1, 1996, to December 31, 1996,
The Period January 1, 1996, to March 31, 1996, and
The Years Ended December 31, 1995 and 1994....................................... F-5

Consolidated Statements of Cash Flows
For the Period January 1, 1997 to June 30, 1997 (unaudited),
The Period April 1, 1996 to June 30, 1996 (unaudited),
The Period April 1, 1996, to December 31, 1996,
The Period January 1, 1996, to March 31, 1996, and
The Years Ended December 31, 1995 and 1994....................................... F-6

Notes to Consolidated Financial Statements....................................... F-8
</TABLE>
<PAGE> 60

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of
The WMF Group, Ltd. and Subsidiary:

We have audited the accompanying consolidated balance sheets of The WMF
Group, Ltd., and Subsidiary (the "Company") (formerly NHP Financial Services,
Ltd. and Subsidiary and formerly WMF Holdings Ltd., and Subsidiaries -- see Note
1) as of December 31, 1996, and March 31, 1996, and the related consolidated
statements of operations, changes in shareholder's equity and cash flows for the
periods April 1, 1996, to December 31, 1996, and January 1, 1996, to March 31,
1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of December 31, 1996, and March 31, 1996, and the results of its operations
and its cash flows for the periods April 1, 1996, to December 31, 1996, and
January 1, 1996, to March 31, 1996, in conformity with generally accepted
accounting principles.

As explained in Note 2 to the consolidated financial statements, effective
January 1, 1996, the Company changed its method of accounting for originated
mortgage servicing rights to comply with Statement of Financial Accounting
Standard No. 122, "Accounting for Mortgage Servicing Rights."

ARTHUR ANDERSEN LLP

Washington, D.C.
February 28, 1997 (except with
respect to the matters discussed in
Note 15, as to which the date is
April 21, 1997, May 5, 1997,
May 9, 1997 and October 3, 1997)

F-1
<PAGE> 61

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
WMF Holdings Ltd. and Subsidiaries:

We have audited the accompanying consolidated balance sheet of WMF Holdings
Ltd. (a wholly owned subsidiary of Commonwealth Overseas Trading Company
Limited), and subsidiaries (collectively "the Company") as of December 31, 1995,
and the related consolidated statements of operations, changes in stockholder's
equity and cash flows for the years ended December 31, 1995 and 1994. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

In our opinion, based on our audits, the consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of WMF Holdings Ltd. and subsidiaries as of December 31, 1995, and the
results of its operations and its cash flows for the years ended December 31,
1995 and 1994, in conformity with generally accepted accounting principles.

KPMG PEAT MARWICK LLP

Washington, D.C.
March 27, 1996

F-2
<PAGE> 62

THE WMF GROUP, LTD. AND SUBSIDIARY
(FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)
CONSOLIDATED BALANCE SHEETS

AS OF AS OF AS OF AS OF
JUNE 30, DECEMBER 31, MARCH 31, DECEMBER 31,
1997 1996 1996 1995
----------- ------------ ----------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS.................... $ 6,294,339 $ 6,601,044 $ 5,435,954 $ 5,197,153
RESTRICTED CASH EQUIVALENTS.................. 1,381,954 1,193,549 922,509 863,000
MORTGAGE-BACKED SECURITIES, at amortized
cost, pledged.............................. 3,880,149 3,909,863 3,888,488 3,892,805
MORTGAGE LOANS HELD FOR SALE, pledged........ 21,645,878 40,262,782 23,116,296 32,461,676
PRINCIPAL, INTEREST AND OTHER SERVICING
ADVANCES................................... 2,277,849 2,012,440 3,720,228 2,795,796
FURNITURE, EQUIPMENT AND LEASEHOLD
IMPROVEMENTS, net of accumulated
depreciation of $566,568, $312,756,
$928,593, and $938,035, respectively....... 1,615,740 1,484,613 887,336 893,463
SERVICING RIGHTS, net of accumulated
amortization of $5,270,191, $3,062,096,
$5,549,284 and $5,078,367, respectively.... 22,921,152 22,460,014 8,477,403 8,465,663
DUE FROM AFFILIATES.......................... -- -- 228,366 1,108,573
GOODWILL, net of accumulated amortization of
$1,036,405, $578,356, $32,099 and $28,391,
respectively............................... 12,182,312 7,704,847 438,582 441,515
OTHER ASSETS................................. 1,856,027 2,467,489 1,860,711 1,056,589
----------- ------------ ----------- ------------
Total assets........................ $74,055,400 $ 88,096,641 $48,975,873 $ 57,176,233
=========== ============ =========== ============

LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES:
Accounts payable and accrued expenses.... $ 2,425,459 $ 2,609,350 $ 4,440,372 $ 2,728,540
Warehouse lines of credit................ 20,870,491 39,924,736 22,660,974 31,830,868
Servicing acquisition line of credit..... 5,961,745 6,211,745 6,412,764 6,439,114
Notes payable to stockholder............. -- -- 5,034,000 5,034,000
Deferred fees............................ 3,271,387 2,786,071 1,876,900 3,034,216
Allowance for loan servicing portfolio
losses................................ 4,849,000 4,395,749 3,426,921 3,141,578
Due to affiliates........................ 9,094,837 872,000 -- --
Other liabilities........................ 1,576,860 5,585,075 800,391 949,575
Deferred tax liability, net.............. 3,026,185 3,183,885 -- --
----------- ------------ ----------- ------------
Total liabilities................... 51,075,964 65,568,611 44,652,322 53,157,891
----------- ------------ ----------- ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDER'S EQUITY:
Common stock, $.01 par value, 7,899,380
shares authorized, 4,217,478 issued
and outstanding....................... 42,175 42,175 42,175 42,175
Additional paid-in capital............... 21,330,690 21,330,690 2,639,679 2,639,679
Retained earnings........................ 1,606,571 1,155,165 1,641,697 1,336,488
----------- ------------ ----------- ------------
Total shareholder's equity.......... 22,979,436 22,528,030 4,323,551 4,018,342
----------- ------------ ----------- ------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY... $74,055,400 $ 88,096,641 $48,975,873 $ 57,176,233
=========== ============ =========== ============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-3
<PAGE> 63

THE WMF GROUP, LTD. AND SUBSIDIARY
(FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PRO FORMA
FOR THE PERIOD FOR THE PERIOD FOR THE YEAR FOR THE PERIOD
JANUARY 1, 1997 APRIL 1, 1996 ENDED APRIL 1, 1996 TO
TO JUNE 30, TO JUNE 30, DECEMBER 31, DECEMBER 31,
1997 1996 1996 1996
--------------- -------------- ------------ ----------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES:
Servicing fees......... $ 5,630,856 $ 2,230,733 $ 9,329,248 $ 7,274,217
Gain on sale of
mortgage loans, net.. 5,917,248 2,603,794 10,220,455 8,112,735
Gain on sale of
servicing............ -- -- -- --
Interest income........ 2,110,763 1,114,146 4,249,980 3,388,219
Placement fee income... 2,312,324 1,195,253 4,959,067 3,823,335
Other income........... 569,203 126,475 1,542,361 874,663
----------- ------------ ----------- ------------
16,540,394 7,270,401 30,301,111 23,473,169
----------- ------------ ----------- ------------
EXPENSES:
Salaries and employee
benefits............. 7,653,790 2,814,191 12,744,963 9,974,957
General and
administrative....... 2,787,994 1,363,794 4,811,034 3,884,199
Occupancy.............. 1,038,083 281,822 1,593,193 1,352,015
Provision for loan
servicing losses..... 453,251 255,894 1,254,172 968,828
Interest............... 602,686 496,207 1,319,498 1,012,179
Amortization of
servicing rights..... 2,208,095 951,026 3,913,642 3,062,096
Depreciation and
amortization......... 738,796 283,064 1,195,204 919,608
Losses from Beverly
Hills Securities
investment/advances... -- -- 600,125 --
----------- ------------ ----------- ------------
15,482,695 6,445,998 27,431,831 21,173,882
----------- ------------ ----------- ------------
INCOME (LOSS) BEFORE INCOME
TAX EXPENSE.............. 1,057,699 824,403 2,869,280 2,299,287
INCOME TAX EXPENSE......... 606,293 402,847 1,984,553 1,144,122
----------- ------------ ----------- ------------
NET INCOME (LOSS).......... $ 451,406 $ 421,556 $ 884,727 $ 1,155,165
=========== ============ =========== ============
NET INCOME (LOSS) PER
SHARE.................... $ .11 $ .10 $ .21 $ .27
=========== ============ =========== ============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING....... 4,217,478 4,217,478 4,217,478 4,217,478
=========== ============ =========== ============

<CAPTION>
FOR THE PERIOD
JANUARY 1, 1996 YEARS ENDED
TO MARCH 31, --------------------------
1996 1995 1994
---------------- ------------ ------------
<S> <C> <C> <C>
REVENUES:
Servicing fees......... $ 2,055,031 $ 7,859,856 $ 6,182,197
Gain on sale of
mortgage loans, net.. 2,107,720 6,244,208 4,532,240
Gain on sale of
servicing............ -- 89,998 --
Interest income........ 861,761 3,290,774 2,088,728
Placement fee income... 1,135,732 3,999,268 2,244,119
Other income........... 667,698 515,240 2,013,203
------------- ----------- -----------
6,827,942 21,999,344 17,060,487
------------- ----------- -----------
EXPENSES:
Salaries and employee
benefits............. 2,770,006 9,208,024 7,324,035
General and
administrative....... 926,835 4,181,202 3,427,829
Occupancy.............. 241,178 972,306 885,931
Provision for loan
servicing losses..... 285,343 856,462 654,186
Interest............... 307,320 2,143,773 2,249,913
Amortization of
servicing rights..... 470,917 2,096,540 1,528,531
Depreciation and
amortization......... 80,578 272,610 397,382
Losses from Beverly
Hills Securities
investment/advances... 600,125 691,549 720,000
------------- ----------- -----------
5,682,302 20,422,466 17,187,807
------------- ----------- -----------
INCOME (LOSS) BEFORE INCOME
TAX EXPENSE.............. 1,145,640 1,576,878 (127,320)
INCOME TAX EXPENSE......... 840,431 799,871 34,520
------------- ----------- -----------
NET INCOME (LOSS).......... $ 305,209 $777,007 $ (161,840)
============= =========== ===========
NET INCOME (LOSS) PER
SHARE.................... $ .07 $.16 $(.03)
============= =========== ===========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING....... 4,217,478 4,717,312 6,216,812
============ ========== ==========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-4
<PAGE> 64

THE WMF GROUP, LTD. AND SUBSIDIARY
(FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
-------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993................. $ 62,168 $ 5,619,686 $ 721,321 $ 6,403,175
Net loss................................ -- -- (161,840) (161,840)
-------- ----------- ----------- -----------
BALANCE AT DECEMBER 31, 1994................. 62,168 5,619,686 559,481 6,241,335
Stock repurchase........................ (19,993) (2,980,007) -- (3,000,000)
Net income.............................. -- -- 777,007 777,007
-------- ----------- ----------- -----------
BALANCE AT DECEMBER 31, 1995................. 42,175 2,639,679 1,336,488 4,018,342
Net income.............................. -- -- 305,209 305,209
-------- ----------- ----------- -----------
BALANCE AT MARCH 31, 1996.................... 42,175 2,639,679 1,641,697 4,323,551
======== ========== ========== ==========
- -----------------------------------------------------------------------------------------------------
Elimination of equity upon sale......... (42,175) (2,639,679) (1,641,697) (4,323,551)
Initial investment...................... 42,175 21,330,690 -- 21,372,865
Net income.............................. -- -- 1,155,165 1,155,165
-------- ----------- ----------- -----------
BALANCE AT DECEMBER 31, 1996................. 42,175 21,330,690 1,155,165 22,528,030
Net income.............................. -- -- 451,406 451,406
-------- ----------- ----------- -----------
BALANCE AT JUNE 30, 1997 (UNAUDITED)......... $ 42,175 $21,330,690 $ 1,606,571 $22,979,436
======== ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE> 65

THE WMF GROUP, LTD. AND SUBSIDIARY
(FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
JANUARY 1, 1997 APRIL 1, 1996 APRIL 1, 1996 TO
TO JUNE 30, TO JUNE 30, DECEMBER 31,
1997 1996 1996
--------------- ---------------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................. $ 451,406 $ 421,556 $ 1,155,165
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization of
furniture, equipment and leasehold
improvements............................ 253,812 92,583 312,756
Amortization of servicing rights.......... 2,208,095 951,026 3,062,096
Provision for loan servicing losses....... 968,828
DUS loss settlement....................... 453,251 255,894 --
Amortization of goodwill.................. 458,049 180,481 578,356
Amortization of bond issuance costs....... -- -- --
Losses from investments/advances.......... -- -- --
Additions to excess servicing fees........ -- -- --
Gain on sale of mortgage servicing
rights.................................. -- -- --
Deferred tax benefit...................... (157,700) -- --
Change in assets and liabilities:
(Increase) decrease in restricted cash
equivalents......................... (188,405) (63,205) (271,040)
Decrease (increase) in principal,
interest and other servicing
advances............................ (265,409) (977,131) 1,707,788
Decrease (increase) in other assets... 314,664 (322,445) 1,210,079
Decrease (increase) in due from
affiliates.......................... -- (15,001) 228,366
Increase in due to affiliates......... 255,420 -- 872,000
Increase (decrease) in accounts
payable and accrued expenses........ (183,891) 1,124,316 (1,831,022)
Increase (decrease) in deferred
fees................................ 485,316 340,419 909,171
Increase (decrease) in warehouse lines
of credit, net...................... (19,054,245) 21,113,456 17,263,762
Increase (decrease) in other
liabilities......................... (646,121) (680,283) 1,681,526
Mortgage loans originated................. (396,200,740) (211,725,354) (657,217,058)
Mortgage loans sold....................... 414,817,644 188,961,700 640,070,572
------------- ------------- -------------
Net cash (used for) provided by
operating activities................ $ 3,001,146 $ (341,988) $ 10,701,345
------------- ------------- -------------

<CAPTION>
FOR THE PERIOD
JANUARY 1,
1996 YEARS ENDED
TO MARCH 31, ----------------------------------
1996 1995 1994
-------------- --------------- ---------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................. $ 305,209 $ 777,007 $ (161,840)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization of
furniture, equipment and leasehold
improvements............................ 77,192 245,242 385,650
Amortization of servicing rights.......... 470,917 2,096,540 1,528,531
Provision for loan servicing losses....... 285,343 856,462 640,412
DUS loss settlement....................... -- (336,148) --
Amortization of goodwill.................. 2,933 11,732 11,732
Amortization of bond issuance costs....... -- -- 333,646
Losses from investments/advances.......... 600,125 691,549 857,733
Additions to excess servicing fees........ -- -- (93,702)
Gain on sale of mortgage servicing
rights.................................. -- (89,998) --
Deferred tax benefit...................... -- -- --
Change in assets and liabilities:
(Increase) decrease in restricted cash
equivalents......................... (59,509) 3,937,000 (4,800,000)
Decrease (increase) in principal,
interest and other servicing
advances............................ (924,432) (1,575,591) (240,668)
Decrease (increase) in other assets... (805,023) 467,570 (133,765)
Decrease (increase) in due from
affiliates.......................... 280,082 (633,609) 22,867
Increase in due to affiliates......... -- -- --
Increase (decrease) in accounts
payable and accrued expenses........ 1,711,832 967,413 (793,337)
Increase (decrease) in deferred
fees................................ (1,157,316) 2,147,116 (1,184,415)
Increase (decrease) in warehouse lines
of credit, net...................... (9,169,894) 26,862,106 (38,644,467)
Increase (decrease) in other
liabilities......................... (143,907) (4,091,591) 3,888,771
Mortgage loans originated................. (176,724,231) (804,891,535) (526,651,388)
Mortgage loans sold....................... 186,069,611 777,540,096 566,278,732
------------- ------------- -------------
Net cash (used for) provided by
operating activities................ $ 818,932 $ 4,981,361 $ 1,244,492
------------- ------------- -------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-6
<PAGE> 66

THE WMF GROUP, LTD. AND SUBSIDIARY
(FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY
AND FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
<TABLE>
<CAPTION>

FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
JANUARY 1, 1997 APRIL 1, 1996 APRIL 1, 1996 TO JANUARY 1, 1996
TO JUNE 30, TO JUNE 30, DECEMBER 31, TO MARCH 31,
1997 1996 1996 1996
--------------- ---------------- ---------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of servicing rights............ $(1,533,778) $ (2,469,251) $ (3,727,581) $ (332,569)
Origination of servicing rights......... (1,135,455) (1,307,794) (2,659,529) (150,088)
Purchase of ACR production system and
pipeline.............................. -- (2,000,000) (2,000,000) --
Sale of mortgage servicing rights....... -- -- -- --
Investment property dispositions
(additions)........................... -- -- -- --
Sheffield mortgage pay-off.............. -- -- -- --
Purchase of furniture, equipment and
leasehold improvements................ (384,939) (467,714) (910,033) (71,065)
Purchase of mortgage-backed
securities............................ -- -- -- --
Principal from mortgage-backed
securities............................ 14,132 6,101 20,873 5,218
Sale of short-term investments.......... -- -- -- --
Decrease (increase) of investment in
affiliates............................ -- -- -- --
----------- ------------ ------------ -----------
Net cash used for investing
activities........................ (3,040,040) (6,238,658) (9,276,270) (548,504)
----------- ------------ ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to servicing acquisition line
of credit............................. -- 3,580,967 3,747,987 --
Repayment of servicing acquisition line
of credit............................. (250,000) -- (3,949,006) (26,350)
Repayment of servicing compensation
rights payable........................ -- -- -- --
Payment on notes payable................ -- -- (34,000) --
Payments on capital lease............... (17,811) (8,098) (24,966) (5,277)
----------- ------------ ------------ -----------
Net cash (used for) provided by
financing activities.................. (267,811) 3,572,869 (259,985) (31,627)
----------- ------------ ------------ -----------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS............................... (306,705) (3,007,777) 1,165,090 238,801
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD.................................... 6,601,044 5,435,954 5,435,954 5,197,153
----------- ------------ ------------ -----------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD.................................... $ 6,294,339 $ 2,428,177 $ 6,601,044 $ 5,435,954
=========== ============ ============ ===========
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for
interest.............................. $ 337,277 $ 342,873 $ 990,212 $ 473,539
Cash paid during the period for income
taxes................................. -- -- 1,008,000 935,070

<CAPTION>
YEARS ENDED
----------------------------------
1995 1994
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of servicing rights............ $ (2,470,149) $ (2,411,982)
Origination of servicing rights......... -- --
Purchase of ACR production system and
pipeline.............................. -- --
Sale of mortgage servicing rights....... 97,481 --
Investment property dispositions
(additions)........................... 2,146,581 (173,954)
Sheffield mortgage pay-off.............. (1,800,000) --
Purchase of furniture, equipment and
leasehold improvements................ (389,605) (252,872)
Purchase of mortgage-backed
securities............................ -- (1,981,789)
Principal from mortgage-backed
securities............................ 22,978 --
Sale of short-term investments.......... -- 1,997,604
Decrease (increase) of investment in
affiliates............................ 50,000 (239,645)
------------- -------------
Net cash used for investing
activities........................ (2,342,714) (3,062,638)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to servicing acquisition line
of credit............................. 944,510 6,400,000
Repayment of servicing acquisition line
of credit............................. (905,396) --
Repayment of servicing compensation
rights payable........................ -- (4,136,301)
Payment on notes payable................ (68,000) --
Payments on capital lease............... (16,625) --
------------- -------------
Net cash (used for) provided by
financing activities.................. (45,511) 2,263,699
------------- -------------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS............................... 2,593,136 445,553
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD.................................... 2,604,017 2,158,464
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD.................................... $ 5,197,153 $ 2,604,017
============= =============
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for
interest.............................. $ 1,579,655 $ 1,933,000
Cash paid during the period for income
taxes................................. 9,275 622,819
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-7
<PAGE> 67

THE WMF GROUP, LTD. AND SUBSIDIARY
(FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1997 (UNAUDITED), DECEMBER 31, 1996, JUNE 30, 1996 (UNAUDITED),
MARCH 31, 1996, AND DECEMBER 31, 1995

1. ORGANIZATION:

On April 1, 1996, NHP Incorporated ("NHP"), a Delaware Corporation,
acquired all the outstanding capital stock of WMF Holdings Ltd. ("Holdings"), a
Delaware corporation, for consideration of approximately $21 million in the form
of $16.8 million in cash and 210,000 shares of NHP's common stock. Holdings was
subsequently renamed NHP Financial Services, Ltd. and NHP Financial Services,
Ltd. has subsequently been renamed The WMF Group, Ltd. (the "Company"). The
Company's principal business activities are mortgage loan origination, secondary
marketing, and servicing.

The Company has one wholly owned subsidiary, Washington Mortgage Financial
Group, Ltd. ("Washington Mortgage Financial"), which is incorporated under the
laws of Delaware. Washington Mortgage Financial's subsidiaries are WMF/Huntoon,
Paige Associates Limited ("WMF/Huntoon"), Sheffield Acquisition Corp. ("SAC"),
and Proctor & Associates of Michigan, Inc. ("Proctor") which are incorporated
under the laws of the states of Delaware, Tennessee and Michigan, respectively.
SAC discontinued operations in 1995 and was dissolved in 1996. The Company has
offices in eight states.

As a result of the acquisition on April 1, 1996, the parent's acquisition cost
was pushed down to the Company and all assets acquired were recorded at their
estimated fair value which resulted in recording an asset of approximately $19.1
million related to acquired servicing rights. In addition, the Company also
recorded approximately $5.1 million of goodwill related to the transaction and a
deferred tax liability of approximately $3.2 million. The goodwill is being
amortized over seven years. The acquired servicing rights are being amortized
over periods up to seven years. Both are amortized based upon the estimated life
of the servicing rights acquired. As a result of the acquisition, shareholder's
equity as of March 31, 1996, was eliminated.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

UNAUDITED QUARTERLY DATA AS OF JUNE 30, 1997, AND FOR THE SIX MONTHS ENDED
JUNE 30, 1997 AND 1996.

In the opinion of management, the accompanying unaudited financial
statements contain all adjustments of a normal recurring nature necessary to
present fairly the financial position of the Company as of June 30, 1997, and
the results of its operations for the six months ended June 30, 1997 and 1996
and its cash flows for the six months ended June 30, 1997 and 1996. These
unaudited financial statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
note disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted.

METHOD OF ACCOUNTING

The consolidated financial statements of the Company are prepared on the
accrual basis of accounting in accordance with generally accepted accounting
principles. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period, particularly with respect to the provision
for loan servicing losses (see Note 8). Actual results could differ from those
estimates.

F-8
<PAGE> 68

THE WMF GROUP, LTD. AND SUBSIDIARY
(FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF JUNE 30, 1997 (UNAUDITED), DECEMBER 31, 1996, JUNE 30, 1996 (UNAUDITED),
MARCH 31, 1996, AND DECEMBER 31, 1995

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiary or subsidiaries. All material intercompany
balances and transactions have been eliminated in consolidation. Certain prior
year amounts have been reclassified to conform with the current year
presentation.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with initial maturities
of 90 days or less to be cash equivalents. These include cash, demand deposits
and overnight repurchase agreements.

RESTRICTED CASH EQUIVALENTS

Restricted cash equivalents are money market funds that are collateral on a
Federal National Mortgage Association ("Fannie Mae") Delegated Underwriting and
Servicing ("DUS") letter of credit.

MORTGAGE-BACKED SECURITIES

The Company classifies its mortgage-backed securities as held-to-maturity
as it has the ability and the intent to hold the securities until maturity.
Held-to-maturity securities are recorded at amortized cost. Premiums and
discounts are amortized using the effective interest rate method over the term
of the security.

MORTGAGE LOANS HELD FOR SALE

Mortgage loans held for sale are carried at the lower of aggregate cost or
market as determined by outstanding commitments from investors or current
investor yield requirements. Typically, loans are held for a period of no more
than three months. At both June 30, 1997 and December 31, 1996, the principal
amount of loans held for a period greater than three months was $300,000. At
both March 31, 1996 and December 31, 1995, the Company held no such loans.

FURNITURE, EQUIPMENT, AND LEASEHOLD IMPROVEMENTS

Furniture, equipment and leasehold improvements are stated at cost, net of
accumulated amortization and depreciation. Depreciation of furniture and
equipment is recognized using the straight-line method over the estimated useful
life of the asset, approximately five years. Leasehold improvements are
amortized over the estimated useful life of the asset or the lease term,
whichever is less. Cost of maintenance and repairs are charged to expense as
incurred.

SERVICING RIGHTS

The Company adopted Statement of Financial Accounting Standard ("SFAS") No.
122, "Accounting for Mortgage Servicing Rights," on January 1, 1996. The primary
change resulting from SFAS No. 122 is that servicing rights retained by the
Company after the origination and sale of the related loan are required to be
capitalized by allocating the total cost incurred between the loan and the
servicing rights based on their relative fair value if it is practicable to
determine the mortgage servicing rights' fair value. If it is not practicable to
determine the servicing rights' fair value then no value is allocated to the
servicing rights. The Company has determined that it is only practicable to
estimate the fair value of servicing rights related to

F-9
<PAGE> 69

THE WMF GROUP, LTD. AND SUBSIDIARY
(FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF JUNE 30, 1997 (UNAUDITED), DECEMBER 31, 1996, JUNE 30, 1996 (UNAUDITED),
MARCH 31, 1996, AND DECEMBER 31, 1995

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

permanent Federal Housing Administration ("FHA") originated loans as other loan
types have a limited secondary market. The capitalization of these originated
mortgage servicing rights increases net income for the period by the amount
capitalized less related amortization and impairment if any. Prior to 1996, no
allocation was made to originated mortgage servicing rights. Purchased servicing
rights continue to be accounted for at their purchase price. Servicing rights
are amortized in proportion to and over the seven-year period of anticipated
estimated net servicing income.

Under SFAS No. 122, all capitalized mortgage servicing rights are evaluated
for impairment based on the excess of the carrying amount of the mortgage
servicing rights over their fair value. In measuring impairment, the servicing
rights are stratified based on the interest rate and loan type of the underlying
loan. The assumptions used in estimating the net cash flows are based on market
conditions and actual experience. Impairment is recognized through a valuation
allowance for each individual stratum. Prior to 1996, the impairment valuation
required no level of disaggregation and any impairment was recorded directly
against the asset.

GOODWILL

The Company evaluates the impairment of goodwill whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. Goodwill
is amortized on a straight-line basis primarily over seven to twenty years.

ALLOWANCE FOR LOAN SERVICING PORTFOLIO LOSSES

The Company bears a portion of the credit loss risk associated with the
loans it services as a result of its participation in the Fannie Mae DUS
multifamily loan program. The allowance for loan servicing portfolio losses
represents management's estimate of the losses which may be incurred on recourse
loans underwritten to date. Management believes the current reserve is adequate
to provide for such future losses. Management regularly reviews the adequacy of
this allowance, considering such items as economic conditions and collateral
value, and makes adjustments to the allowance as considered necessary.

SERVICING FEES

Servicing fee income represents fees earned for servicing multi-family and
commercial real estate mortgage loans owned by institutional investors,
including subservicing fees, net of guarantee fees, pool insurance fees and
trustee fees. The fees are generally calculated on the outstanding principal
balances of the loans serviced and are recorded as income when collected. Late
charge income is recognized as income when collected and is included in
servicing fee income.

GAINS ON SALE OF MORTGAGE LOANS

Gains on sale of mortgage loans are recognized based upon the difference
between the selling price and the carrying value of the related mortgage loans
sold, net of the allocation to servicing rights for permanent FHA originated
loans. Deferred origination fees and expenses, net of commitment fees paid in
connection with the sale of the loans, are recognized at the time of sale in the
gain or loss determination.

F-10
<PAGE> 70

THE WMF GROUP, LTD. AND SUBSIDIARY
(FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF JUNE 30, 1997 (UNAUDITED), DECEMBER 31, 1996, JUNE 30, 1996 (UNAUDITED),
MARCH 31, 1996, AND DECEMBER 31, 1995

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

PLACEMENT FEE INCOME

Placement fee income represents revenue earned relating to the placement
and utilization of escrow funds. Income is recognized during the period in which
it is earned.

INCOME TAXES

Since acquisition, the Company files a consolidated tax return with NHP,
its parent. However, the Company records income taxes as if it filed a return on
a stand-alone basis. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. Prior to the acquisition,
the Company filed a consolidated tax return together with its subsidiaries.

NET INCOME PER SHARE

Net income per share is computed using the weighted average number of
common shares outstanding during each period after giving effect to the stock
split discussed in Note 15.

NEW ACCOUNTING STATEMENTS

SFAS No. 123, "Accounting for Stock-Based Compensation," effective for
fiscal years beginning after December 15, 1995, encourages, but does not
require, a fair-value based method of accounting for employee stock options or
similar equity instruments. It also allows an entity to elect to continue to
measure compensation cost under Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," ("APB No. 25"), but requires pro
forma disclosures of net income and earnings per share as if the fair value
based method of accounting had been applied. Adoption of this statement does not
impact the Company since there are currently no stock options outstanding.

During 1996 the Financial Accounting Standards Board ("FASB") issued SFAS
No. 125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities." This statement provides accounting and
reporting standards for transfers and servicing of financial assets and
extinguishments of liabilities using a financial components approach that
focuses on control. This statement provides consistent standards for
distinguishing transfers of financial assets that are sold from transfers that
are secured borrowings. Adoption of this statement is required on a prospective
basis in fiscal years beginning after December 31, 1996. Management adopted the
statement for the fiscal year ending December 31, 1997, and does not believe
that the impact of such adoption will be material to the financial statements.

In February 1997, FASB issued SFAS No. 128 "Earnings per Share" ("FAS
128"). FAS 128 changes the requirements for calculation and disclosure of
earnings per share. This statement eliminates the calculation of primary
earnings per share and requires the disclosure of basic earnings per share and
diluted earnings per share. There will be no impact to the Company's earnings
per share as a result of adoption.

F-11
<PAGE> 71

THE WMF GROUP, LTD. AND SUBSIDIARY
(FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF JUNE 30, 1997 (UNAUDITED), DECEMBER 31, 1996, JUNE 30, 1996 (UNAUDITED),
MARCH 31, 1996, AND DECEMBER 31, 1995

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)

income are to be reported in a separate statement of comprehensive income. This
statement is effective beginning January 1, 1998. Management does not expect the
new standard to have a material effect on net income as already reported.

3. ACQUISITIONS AND DISPOSITIONS:

Washington Mortgage Financial was incorporated on October 3, 1990, and was
capitalized on December 31, 1990. During 1993, all outstanding shares of
preferred stock of Washington Mortgage Financial were exchanged for shares of
common stock of Washington Mortgage Financial. In addition, the majority
shareholder purchased the minority shareholder's interest in Washington Mortgage
Financial and exchanged all outstanding shares of Washington Mortgage Financial
for common stock in Holdings, thus making Washington Mortgage Financial a wholly
owned subsidiary of Holdings.

On October 1, 1991, Washington Mortgage Financial acquired 100 percent of
the outstanding stock of WMF/Huntoon for $1,175,276 in cash and a note payable
for $170,000 to the seller. The $170,000 acquisition note matured in 1996 and
had an interest rate of 2 percent. Principal payments were made in equal
installments of $34,000 a year. The principal balance of the note at December
31, 1996, March 31, 1996, and December 31, 1995, is $0, $34,000, and $34,000,
respectively.

Holdings was incorporated on October 20, 1992, and was capitalized on
December 3, 1992. Holdings was a wholly owned subsidiary of Commonwealth
Overseas Trading Company Limited before it was acquired by NHP.

SAC was incorporated in 1992 and its principal business activity was owning
and managing a multifamily property located in Memphis, Tennessee. Washington
Mortgage Financial entered into an agreement to sell the property in December
1994. The property was sold in February 1995 for $2,464,000. After adjusting the
sales proceeds for selling expenses and a participation interest in the
property, Washington Mortgage Financial realized a loss of $54,233. This loss
was accrued at December 31, 1994. SAC discontinued operations in 1995 and was
dissolved in 1996.

In July 1994, Washington Mortgage Financial exchanged its stock in a wholly
owned subsidiary, WMF Residential Mortgage Corporation ("Residential") for an
ownership interest in Beverly Hills Securities Company, Ltd. ("Beverly").
Residential and Beverly specialize in the origination, purchase, sale, and
servicing of single family residential loans. No gain or loss was recognized on
the exchange. The Company owns approximately a 40 percent limited partnership
interest in Beverly and is accounting for its investment under the equity
method. As of March 31, 1996, the carrying value of the Company's investment in
and advances to Beverly had been reduced to $0 as a result of operating losses
and concerns about the recoverability of the investment and advances. The
Company has no additional exposure related to Beverly.

In May 1996, WMF/Huntoon purchased the loan production system and pipeline,
as well as certain fixed assets of American Capital Resource ("ACR") for
approximately $2.2 million cash. In connection with the purchase, WMF/Huntoon
also acquired approximately $2.0 million of servicing rights. As a result,
WMF/Huntoon recorded assets of approximately $4.2 million representing the fair
value of the assets acquired. The servicing rights acquired are being amortized
over seven years, which is the estimated life of the servicing rights acquired.
The loan production system and pipeline acquired are being amortized in
proportion to the loans originated from the acquired pipeline. These costs are
expected to be fully amortized by

F-12
<PAGE> 72

THE WMF GROUP, LTD. AND SUBSIDIARY
(FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF JUNE 30, 1997 (UNAUDITED), DECEMBER 31, 1996, JUNE 30, 1996 (UNAUDITED),
MARCH 31, 1996, AND DECEMBER 31, 1995

3. ACQUISITIONS AND DISPOSITIONS -- (CONTINUED)

August 1997. ACR specializes in the origination and servicing of multifamily
mortgage loans guaranteed by the FHA.

On December 31, 1996, the Company purchased 100 percent of Proctor for
approximately $3.7 million. NHP paid cash for the purchase on January 2, 1997,
on behalf of the Company. As such, the Company has accrued approximately $3.7
million as of December 31, 1996. The acquisition was accounted for as a purchase
and accordingly, the acquired assets and liabilities have been recorded at their
estimated fair values at the date of acquisition. As a result, tangible assets
of approximately $600,000, current liabilities of $200,000, and goodwill of $3.1
million were recorded. The goodwill will be amortized on a straight-line basis
over twenty years. The twenty year amortization period is the estimated life of
the mortgage loan production operations acquired. Proctor specializes in the
origination and servicing of commercial loans.

On April 15, 1997, the Company purchased Askew Investment in Dallas, Texas
for $5.6 million. In accordance with the purchase agreement, $4.6 million of the
purchase price was paid upon closing with the remaining $1.0 million due in the
future based upon the origination of specific amounts of mortgage loans. The
acquisition has been accounted for as a purchase resulting in goodwill of $4.6
million. Such goodwill will be amortized on a straightline basis over twenty
years which is the estimated life of the mortgage loan production operations
acquired. ASKEW Investment is a multifamily and commercial mortgage bank with
correspondent relationships with fourteen insurance companies, which originated
$374 million of mortgages in 1996.

4. MORTGAGE-BACKED SECURITIES:

Mortgage-backed securities consist of Government National Mortgage
Association ("Ginnie Mae") securities. The market value of the securities is
$3,878,210, $3,898,019, $3,950,804, and $3,988,943 at June 30, 1997, December
31, 1996, March 31, 1996, and December 31, 1995, respectively. The securities
held at June 30, 1997, mature in periods from 2028 to 2029 and are collateral
for a letter of credit established on behalf of Fannie Mae for loans originated
under the DUS program. These securities carry a AAA credit rating.

5. FURNITURE, EQUIPMENT, AND LEASEHOLD IMPROVEMENTS:

Furniture, equipment and leasehold improvements consist of the following as
of:

JUNE 30, DECEMBER 31, MARCH 31, DECEMBER 31,
1997 1996 1996 1995
---------- ------------ ---------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Furniture and equipment.............. $1,846,118 $1,533,773 $1,543,643 $1,559,212
Capital lease........................ 125,091 125,091 150,109 150,109
Leasehold improvements............... 211,099 138,505 122,177 122,177
---------- ---------- ---------- ----------
2,182,308 1,797,369 1,815,929 1,831,498
Less -- Accumulated depreciation and
amortization....................... 566,568 312,756 928,593 938,035
---------- ---------- ---------- ----------
$1,615,740 $1,484,613 $ 887,336 $ 893,463
========== ========== ========== ==========
</TABLE>

F-13
<PAGE> 73

THE WMF GROUP, LTD. AND SUBSIDIARY
(FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF JUNE 30, 1997 (UNAUDITED), DECEMBER 31, 1996, JUNE 30, 1996 (UNAUDITED),
MARCH 31, 1996, AND DECEMBER 31, 1995

6. DEBT FACILITIES:

The Company has a warehouse line of credit which can be drawn for purposes
of originating loans that had an $80 million credit limit in 1995 that was
subsequently increased to $150 million in the third quarter of 1996. This credit
limit has been temporarily increased at times to allow increased borrowings
beyond the credit limit. The warehouse line of credit is secured by mortgage
loans held for sale and is required to be repaid with interest upon sale of the
mortgage loans. The interest rate on the warehouse line of credit was 3/4
percent for the period January 1, 1997, to June 30, 1997, 1 to 1 1/2 percent in
1996 and 1 1/2 to 2 percent in 1995 to the extent compensating balances are
maintained or was equal to the London InterBank Offered Rate ("LIBOR") plus 3/4
percent for the period January 1, 1997 to June 30, 1997, 1 to 1 1/2 percent in
1996, and 1 1/2 to 2 percent in 1995 for amounts borrowed in excess of
compensating balances.

The Company had an additional warehouse agreement providing $15 million of
revolving credit at 1 1/2 percent for the period January 1, 1997 to March 31,
1997 and in 1996 and at 1 5/8 percent in 1995 to the extent compensating
balances are maintained and at prime for amounts borrowed in excess of
compensating balances. This warehouse line of credit was secured by mortgage
loans held for sale and was required to be repaid with interest upon the sale of
the mortgage loans. This warehouse line of credit expired and was not renewed on
April 1, 1997.

As of March 31, 1996, the Company had two mortgage loans held for sale with
an unpaid principal balance of $8,679,611 warehoused under a repurchase
agreement. These two loans were subsequently sold in October and December of
1996 resulting in a net gain of $46,147.

The Company has a separate $10 million line of credit which was used
exclusively for servicing acquisitions. In October 1996, this facility was
converted to a term loan. The debt is to be repaid in twenty equal quarterly
installments based on a 10-year amortization schedule beginning on October 31,
1996, with the remaining balance due in June 2001. The interest rate on the
servicing acquisition line of credit was 3 percent for the period January 1,
1997, to June 30, 1997, and 3 to 3 1/2 percent in 1996 and 3 1/2 percent in 1995
to the extent compensating balances are maintained or was equal to LIBOR plus 3
percent for the period January 1, 1997, to June 30, 1997, and 3 to 3 1/2 percent
in 1996 and 3 1/2 percent in 1995 for amounts borrowed in excess of compensating
balances. Interest is payable monthly. The servicing acquisition line is
collateralized by servicing rights relating to loans with an approximate unpaid
principal balance of $5.1 billion as of June 30, 1997. Because this facility was
converted to a term loan, the Company cannot borrow any additional amounts under
this line. This facility will mature as follows as of June 30, 1997: $500,000
for the period July 1, 1997 to December 31, 1997, $1 million in each year from
1998 through 2000 and $2,461,745 in 2001.

The Company has a $10 million revolving credit agreement to be used for
servicing acquisitions or working capital purposes. There have been no
borrowings under this facility. The revolving credit agreement is renewable
annually through June 2001 and requires monthly interest payments. Any principal
balance outstanding in June 2001 would be converted to a term loan due in
quarterly installments through June 2006. The interest rate on the term loan is
3 1/2 percent for amounts borrowed to the extent compensating balances are
maintained or is equal to LIBOR plus 3 1/2 percent for amounts borrowed in
excess of compensating balances. The term loan is collateralized by all
nonrecourse servicing rights.

Included in notes payable at March 31, 1996, and December 31, 1995, is a $2
million, 10 percent interest bearing note dated December 9, 1993, payable to a
stockholder of Holding's parent. Also, included in notes payable at March 31,
1996, and December 31, 1995, is a $3 million, 12 percent interest bearing note
dated April 1, 1995, which is payable to Holding's parent. This note was issued
to repurchase 1,999,334 shares of

F-14
<PAGE> 74

THE WMF GROUP, LTD. AND SUBSIDIARY
(FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF JUNE 30, 1997 (UNAUDITED), DECEMBER 31, 1996, JUNE 30, 1996 (UNAUDITED),
MARCH 31, 1996, AND DECEMBER 31, 1995

6. DEBT FACILITIES -- (CONTINUED)

common stock. As part of NHP's acquisition of the Company on April 1, 1996,
these notes were paid-off by NHP and both the Company's obligation and interest
payable for the period January 1, 1996, to March 31, 1996, were forgiven.

On May 1, 1997, the Company entered into a $35 million revolving line of
credit which will be principally drawn for purposes of originating loans. The
warehouse advances are secured by mortgage loans held for sale and are required
to be repaid upon sale of the mortgage loans. The interest rate on the warehouse
advances is 3/4 percent to the extent compensating balances are maintained or is
equal to the Euro-Rate plus 3/4 percent for amounts borrowed in excess of the
compensating balances. Interest is payable monthly. The facility can also be
used for principal and interest advances and working capital purposes with
credit limits of $2.5 million to $5.0 million respectively. The interest rate on
the principal and interest advances and working capital portion of the facility
are 1.5% and 2.0% to the extent compensating balances are maintained or the
Euro-Rate plus 1.5% or 2% for amounts borrowed in excess of the compensating
balances, respectively. Interest is payable monthly. The maximum principal
amount that may be borrowed under the three different facilities is $35 million.
There were no borrowings under this facility as of June 30, 1997.

The Company has also established a letter of credit of $4,400,000,
$4,200,000 and $3,800,000 on behalf of Fannie Mae for the DUS program as of June
30, 1997, December 31, 1996 and 1995, respectively. This letter of credit is
secured by cash equivalents and mortgage-backed securities with a market value
of $5,260,164, $5,091,568 and $4,911,452 as of June 30, 1997, December 31, 1996,
and 1995, respectively.

The Company's debt agreements require the maintenance of certain financial
ratios relating to liquidity, leverage, working capital, and net worth among
other restrictions, all of which were met at June 30, 1997.

Following is certain information relating to the Company's various credit
agreements for the period January 1, 1997 to June 30, 1997, April 1, 1996, to
December 31, 1996, January 1, 1996, to March 31, 1996, and for the year ended
December 31, 1995.

AVERAGE MAXIMUM INTEREST AVERAGE
BALANCE AT BALANCE BALANCE RATE AT INTEREST
JUNE 30, OUTSTANDING OUTSTANDING JUNE 30, RATE DURING
1997 FOR PERIOD FOR PERIOD 1997 PERIOD
------------ ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
$150 million warehouse line...... $ 20,870,491 $43,268,564 $55,667,089 .75% .75%
$10 million servicing loan....... 5,961,745 6,086,745 6,211,745 3.0% 3.0%
</TABLE>

<TABLE>
<CAPTION>
INTEREST
AVERAGE MAXIMUM RATE AT AVERAGE
BALANCE AT BALANCE BALANCE DECEMBER INTEREST
DECEMBER 31, OUTSTANDING OUTSTANDING 31, RATE DURING
1996 FOR PERIOD FOR PERIOD 1996 PERIOD
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$150 million warehouse line...... $ 39,924,736 $43,326,846 $52,885,171 1.0% 1.2%
$15 million warehouse line....... -- 3,764,825 7,100,000 1.5% 1.5%
$10 million servicing loan....... 6,211,745 8,884,286 9,959,731 3.0% 3.2%
</TABLE>

F-15
<PAGE> 75

THE WMF GROUP, LTD. AND SUBSIDIARY
(FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF JUNE 30, 1997 (UNAUDITED), DECEMBER 31, 1996, JUNE 30, 1996 (UNAUDITED),
MARCH 31, 1996, AND DECEMBER 31, 1995

6. DEBT FACILITIES -- (CONTINUED)

<TABLE>
<CAPTION>
AVERAGE MAXIMUM INTEREST AVERAGE
BALANCE AT BALANCE BALANCE RATE AT INTEREST
MARCH 31, OUTSTANDING OUTSTANDING MARCH 31, RATE DURING
1996 FOR PERIOD FOR PERIOD 1996 PERIOD
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$80 million warehouse line....... $ 12,054,363 $33,669,834 $50,944,777 1.5% 1.5%
$15 million warehouse line....... 1,927,000 2,929,086 10,965,000 1.5% 1.5%
$10 million servicing acquisition
line........................... 6,412,764 6,440,414 6,439,114 3.5% 3.5%
</TABLE>

<TABLE>
<CAPTION>
INTEREST
AVERAGE MAXIMUM RATE AT AVERAGE
BALANCE AT BALANCE BALANCE DECEMBER INTEREST
DECEMBER 31, OUTSTANDING OUTSTANDING 31, RATE DURING
1995 FOR PERIOD FOR PERIOD 1995 PERIOD
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$80 million warehouse line....... $ 31,830,868 $26,194,661 $96,766,452 2.0% 2.0%
$15 million warehouse line....... -- 2,393,356 9,105,000 1.6% 1.6%
$10 million servicing acquisition
line........................... 6,439,114 6,663,245 7,061,301 3.5% 3.5%
</TABLE>

7. SERVICING RIGHTS:

The activity for servicing rights consists of the following:

FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
JANUARY 1, 1997 TO APRIL 1, 1996 TO JANUARY 1, 1996 TO YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996 MARCH 31, 1996 DECEMBER 31, 1995
------------------ ----------------- ------------------ -----------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Beginning balance, net........ $ 22,460,014 $ 8,477,403 $8,465,663 $ 8,099,539
Increase due to
acquisition............ -- 10,657,597 -- --
Purchases................ 1,533,778 3,727,581 332,569 2,470,149
Originations............. 1,135,455 2,659,529 150,088 --
Sale..................... -- -- -- (7,485)
Amortization............. (2,208,095) (3,062,096) (470,917) (2,096,540)
Impairment loss.......... -- -- -- --
------------ ----------- ---------- -----------
Ending balance, net........... $ 22,921,152 $22,460,014 $8,477,403 $ 8,465,663
============ =========== ========== ===========
</TABLE>

The fair value of the mortgage servicing rights was approximately $43.2
million at June 30, 1997. This estimated fair value presented herein is not
necessarily indicative of the amounts the Company could realize in a current
market exchange. The use of different market assumptions, valuation
methodologies or both may have a material effect on the estimates of fair value.
The fair value estimate presented herein is based on pertinent information
available as of June 30, 1997. During 1995, Washington Mortgage Financial
received capitalized servicing from WMF/Huntoon with a book value of $137,545.
Washington Mortgage Financial reduced the investment in WMF/Huntoon by this
amount and recognized no gain or loss on the transfer.

8. LOAN ADMINISTRATION:

The Company's portfolio of mortgage loans serviced for institutional
investors aggregated approximately $7.5 billion, $6.2 billion, $4.5 billion, and
$4.4 billion at June 30, 1997, December 31, 1996, March 31, 1996, and December
31, 1995, respectively. Included in the Company's portfolio are approximately
$7.0 billion, $5.8 billion, $4.1 billion, and $3.9 billion of multifamily and
commercial loans, and $511 million, $396 million, $413 million, and $515 million
in construction loans at June 30, 1997, December 31, 1996, March 31, 1996, and
December 31, 1995, respectively.

F-16
<PAGE> 76

THE WMF GROUP, LTD. AND SUBSIDIARY
(FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF JUNE 30, 1997 (UNAUDITED), DECEMBER 31, 1996, JUNE 30, 1996 (UNAUDITED),
MARCH 31, 1996, AND DECEMBER 31, 1995

8. LOAN ADMINISTRATION -- (CONTINUED)

The principal balances of mortgage loans serviced for others are summarized
by investor as follows:
<TABLE>
<CAPTION>
JUNE 30, 1997 DECEMBER 31, 1996 MARCH 31, 1996 DECEMBER 31, 1995
------------------------- ------------------------- ------------------------- -------------------------
UNPAID UNPAID UNPAID UNPAID
NUMBER PRINCIPAL NUMBER PRINCIPAL NUMBER PRINCIPAL NUMBER PRINCIPAL
OF LOANS BALANCE OF LOANS BALANCE OF LOANS BALANCE OF LOANS BALANCE
-------- -------------- -------- -------------- -------- -------------- -------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investor:
Federal National
Mortgage
Association.... 326 $1,424,383,978 299 $1,305,976,298 283 $1,146,884,992 240 $ 956,431,808
Government
National
Mortgage
Association.... 360 1,460,499,243 318 1,275,179,590 250 837,769,000 246 816,996,796
Federal Home Loan
Mortgage
Corporation.... 220 211,056,933 248 245,697,852 306 277,964,249 323 287,110,622
Other
investors...... 1,749 4,415,424,245 1,271 3,374,584,096 977 2,257,563,518 1,008 2,352,289,428
------ -------------- ----- -------------- ----- -------------- ----- --------------
Total loans
serviced for
others........... $2,655 7,511,364,399 2,136 $6,201,437,836 1,816 $4,520,181,759 1,817 $4,412,828,654
====== ============== ===== ============== ===== ============== ===== ==============
</TABLE>

The Company's mortgage servicing portfolio has the following geographic and
interest rate concentrations based on the book value of the servicing rights as
of December 31, 1996:

<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
STATE:
New York................................................... 11.2%
Texas...................................................... 11.9%
Other...................................................... 76.9%
----
100%
====
INTEREST RATE:
Less than 7.5%............................................. 23.2%
7.5% to 9.49%.............................................. 71.4%
greater than 9.49%......................................... 5.4%
----
100%
====
</TABLE>

In connection with the construction loan portfolio, the Company makes
certain advances. On FHA insured construction loans, the Company advances
construction funds pending security holder purchases. Such advances amounted to
$3,945,592, $4,240,193, $2,629,879, and $2,456,826 at June 30, 1997, December
31, 1996, March 31, 1996, and December 31, 1995, respectively. The Company is
obligated to advance approximately another $249 million, $258 million and $212
million on construction loans administered at June 30, 1997, December 31, 1996,
and December 31, 1995, respectively. These construction advances are
subsequently funded by the respective investors.

In addition, the Company makes voluntary advances under certain of its
servicing agreements pending receipt from the mortgagors. Such advances amounted
to $2,277,849, $2,012,440, $3,720,228 and $2,795,796 at June 30, 1997, December
31, 1996, March 31, 1996, and December 31, 1995, respectively.

Related escrow funds of approximately $270 million, $228 million, $203
million and $207 million at June 30, 1997, December 31, 1996, March 31, 1996,
and December 31, 1995, respectively, are on deposit in

F-17
<PAGE> 77

THE WMF GROUP, LTD. AND SUBSIDIARY
(FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF JUNE 30, 1997 (UNAUDITED), DECEMBER 31, 1996, JUNE 30, 1996 (UNAUDITED),
MARCH 31, 1996, AND DECEMBER 31, 1995

8. LOAN ADMINISTRATION -- (CONTINUED)

escrow bank accounts and are not included in the accompanying consolidated
balance sheet. As of June 30, 1997, the Company carried blanket bond insurance
coverage of $7.5 million and errors and omissions insurance coverage in the
amount of $12.5 million.

The Company bears the Level I risk of loss associated with the loans it
services under the Fannie Mae DUS program. The Level I risk of loss imposes a
lender deductible of 5 percent of the unpaid principal balance and limits the
maximum loss to 20 percent of the original mortgage. The unpaid principal
balance of the Fannie Mae DUS loan servicing portfolio was approximately $815
million, $776 million, $647 million, and $648 million at June 30, 1997, December
31, 1996, March 31, 1996, and December 31, 1995, respectively. The DUS loans are
secured by first liens on the underlying multifamily properties. The Company's
portfolio includes one state (Texas) comprising over 10 percent of the total
portfolio. No other state comprises over 10 percent of the portfolio. One Fannie
Mae DUS loan with an unpaid principal balance of approximately $2.5 million was
foreclosed upon in 1995. The Company satisfied its servicing responsibilities
and the loan was assigned to Fannie Mae. No Fannie Mae DUS loans were delinquent
as of June 30, 1997, December 31, 1996, March 31, 1996 and December 31, 1995.
The Company has provided a reserve for losses of $4,849,000, $4,395,749,
$3,426,921, and $3,141,578 as of June 30, 1997, December 31, 1996, March 31,
1996, and December 31, 1995, respectively. This reserve represents management's
estimate of losses which may be incurred on loans underwritten to date that are
currently being serviced. This reserve is assessed monthly and is based on
current market conditions.

Activity in the allowance for losses is summarized as follows:

FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
JANUARY 1, 1997 TO APRIL 1, 1996, TO JANUARY 1, 1996 TO YEAR ENDED
JUNE 30, DECEMBER 31, MARCH 31, DECEMBER 31,
1997 1996 1996 1995
------------------- ----------------- ------------------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Balance, beginning of period....... $ 4,395,749 $ 3,426,921 $ 3,141,578 $2,621,264
Provisions for possible loan
servicing losses............ 453,251 968,828 285,343 856,462
Charge-off on Level I Risk for
foreclosed loans............ -- -- -- (336,148)
----------- ----------- ----------- ----------
Balance, end of period............. $ 4,849,000 $ 4,395,749 $ 3,426,921 $3,141,578
=========== =========== =========== ==========
</TABLE>

F-18
<PAGE> 78

THE WMF GROUP, LTD. AND SUBSIDIARY
(FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF JUNE 30, 1997 (UNAUDITED), DECEMBER 31, 1996, JUNE 30, 1996 (UNAUDITED),
MARCH 31, 1996, AND DECEMBER 31, 1995

9. INCOME TAXES:

Income tax expense for the period January 1, 1997 to June 30, 1997, April
1, 1996, to December 31, 1996, January 1, 1996 to March 31, 1996, and the year
ended December 31, 1995, was $606,293, $1,144,122, $840,431, and $799,871,
respectively, which consisted of $72,755, $143,015, $226,748, and $259,871 in
state taxes and $533,538, $1,001,107, $613,683, and $540,000 in Federal taxes,
respectively. The following is a summary of the tax effects of temporary
differences that give rise to significant portions of the deferred tax assets
and deferred tax liabilities.

JUNE 30, DECEMBER 31, MARCH 31, DECEMBER 31,
1997 1996 1996 1995
----------- ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Deferred tax assets:
Book reserve for loan servicing
portfolio losses.................... $ 1,939,600 $ 1,758,300 $ 1,370,768 $1,068,000
Losses on investment in Beverly....... -- -- 351,000 111,000
----------- ------------ ------------ ----------
Total gross deferred tax
assets......................... 1,939,600 1,758,300 1,721,768 1,179,000
Less -- Valuation allowance................ -- -- (1,037,751) (581,000)
----------- ------------ ------------ ----------
Net deferred tax assets.......... 1,939,600 1,758,300 684,017 598,000
Deferred tax liabilities:
Furniture and equipment, principally
due to differences in
depreciation........................ (26,719) (16,465) (13,452) (12,000)
Originated mortgage servicing
rights.............................. (1,413,329) (1,053,125) (41,684) --
Purchased servicing rights,
principally due to purchase price
adjustments......................... (3,525,737) (3,830,239) (628,881) (586,000)
Other................................. -- (42,356) -- --
----------- ------------ ------------ ----------
Total gross deferred tax
liabilities.................... (4,965,785) (4,942,185) (684,017) (598,000)
----------- ------------ ------------ ----------
Net deferred tax liabilities..... $(3,026,185) $ (3,183,885) $ -- $ --
=========== ============ ============ ==========
</TABLE>

The differences between the effective income tax rates and the Federal
statutory income tax rates are as follows:

FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD YEAR ENDED
JANUARY 1, 1997 TO APRIL 1, 1996 TO JANUARY 1, 1996 TO DECEMBER 31,
MARCH 31, 1997 DECEMBER 31, 1996 MARCH 31, 1996 1995
------------------- ----------------- ------------------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Federal income tax rate.......... 35% 35% 35% 34%
State income tax rate............ 5 5 5 5
Valuation allowance.............. -- -- 25 12
Goodwill amortization............ 17 10 8 --
-- -- -- --
Effective income tax rate........ 57% 50% 73% 51%
== == == ==
</TABLE>

Prior to April 1, 1996, a valuation allowance equal to the deferred tax
asset was established due to the uncertainty surrounding the Company's ability
to generate sufficient taxable income in future years to realize such assets. As
a result of the acquisition of the Company by NHP, management believes that the
valuation

F-19
<PAGE> 79

THE WMF GROUP, LTD. AND SUBSIDIARY
(FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF JUNE 30, 1997 (UNAUDITED), DECEMBER 31, 1996, JUNE 30, 1996 (UNAUDITED),
MARCH 31, 1996, AND DECEMBER 31, 1995

9. INCOME TAXES -- (CONTINUED)

allowance is no longer necessary because of the deferred tax liabilities
generated and the projected economies of scale from the Company's acquisitions.

The Company had no net operating loss carryforwards available to offset
future income as of June 30, 1997, December 31, 1996, March 31, 1996, and
December 31, 1995.

10. COMMITMENTS AND CONTINGENCIES:

LEASES

The Company is obligated under noncancelable leases for office space,
furniture and equipment. Minimum future lease payments are as follows as of June
30, 1997.

<TABLE>
<CAPTION>
YEAR
----------------------------------------------------------------
<S> <C>
1997 (remaining six months)..................................... $ 659,132
1998............................................................ 1,139,104
1999............................................................ 1,135,468
2000............................................................ 1,055,866
2001............................................................ 351,146
Thereafter...................................................... 1,091,283
----------
Total...................................................... $5,431,999
=========
</TABLE>

Rent expense was approximately $798,000, $975,000, $230,000, and $922,000
in the period January 1, 1997 to June 30, 1997, April 1, 1996, to December 31,
1996, January 1, 1996, to March 31, 1996, and the year ended December 31, 1995.

LOAN COMMITMENTS

At June 30, 1997, December 31, 1996, and December 31, 1995, the Company had
floating rate commitments outstanding to originate approximately $49,325,000,
$8,048,000 and $53,190,000, respectively, in multifamily and commercial mortgage
loans and mandatory delivery commitments in the amount of approximately
$12,385,300, $48,210,000 and $32,462,000, respectively, to cover the Company's
origination commitments and loans held for sale.

LITIGATION

The Company is involved in litigation related to the normal course of
business. Management is of the opinion that the litigation will not have a
material adverse impact on the Company's financial position or operating
results. No amounts have been accrued because the loss, if any, cannot be
reasonably estimated.

One of the Company's previous subsidiaries, Vienna Mortgage Corporation
("VMC"), was involved in a dispute with the FDIC over a terminated servicing
agreement in 1991. The Company settled a judgment for the FDIC by paying
$550,000 on behalf of VMC in 1995. The Company has no further liability in this
matter.

F-20
<PAGE> 80

THE WMF GROUP, LTD. AND SUBSIDIARY
(FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF JUNE 30, 1997 (UNAUDITED), DECEMBER 31, 1996, JUNE 30, 1996 (UNAUDITED),
MARCH 31, 1996, AND DECEMBER 31, 1995

10. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)

EMPLOYEE BENEFIT PLANS

The Company has initiated a defined contribution plan under Section 401(k)
of the Internal Revenue Code covering substantially all employees. Employees may
contribute to the plan up to 15 percent of their salary up to the maximum
allowable by the Internal Revenue Code. The Company will match employee
contributions at 50 percent for an amount up to 5 percent of each employee's
salary. Company contributions vest 20 percent after the first year of employment
and an additional 20 percent in each subsequent year until fully vested in the
fifth year. Contributions by the Company were approximately $96,797, $75,360,
$18,840, and $97,000 for the period January 1, 1997 to June 30, 1997, April 1,
1996, to December 31, 1996, January 1, 1996, to March 31, 1996, and the year
ended December 31, 1995, respectively.

11. DUE FROM (TO) AFFILIATES:

As of December 31, 1995, the Company had advanced funds of $1,085,795 to
Beverly. The Company collected $485,670 in 1996, and wrote the remainder of the
receivable off resulting in a $600,125 loss in 1996.

As of December 31, 1996, the Company has accrued in other liabilities,
approximately $3.4 million payable to NHP as NHP funded the purchase of Proctor
on January 2, 1997. The $872,000 of due to affiliate as of December 31, 1996,
represents a payable to NHP for taxes paid on behalf of the Company. As of June
30, 1997 the $3.4 million payable to NHP has been reclassified into due to
affiliate as NHP funded the purchase of Proctor on January 2, 1997. Also in due
to affiliate as of June 30, 1997 is $4.6 million which is due to NHP as NHP
funded the purchase of Askew (See Note 15) in April 1997 on behalf of the
Company. The remaining $1.1 million in due to affiliate as of June 30, 1997
represents a payable to NHP for taxes paid on behalf of the Company in addition
to interest incurred and payable to NHP related to these fundings by NHP.

12. DISCLOSURES OF FAIR VALUE OF FINANCIAL INSTRUMENTS:

SFAS No. 107 requires that the Company disclose estimated fair values for
its financial instruments. The basic assumptions used and the estimates
disclosed in the fair value balance sheets represent management's best judgment
of appropriate valuation methods. These estimates are based on pertinent
information available to management. In certain cases, fair values are not
subject to precise quantification or verification and may change as economic and
market factors, and management's evaluation of those factors change.

F-21
<PAGE> 81

THE WMF GROUP, LTD. AND SUBSIDIARY
(FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF JUNE 30, 1997 (UNAUDITED), DECEMBER 31, 1996, JUNE 30, 1996 (UNAUDITED),
MARCH 31, 1996, AND DECEMBER 31, 1995

12. DISCLOSURES OF FAIR VALUE OF FINANCIAL INSTRUMENTS -- (CONTINUED)

Although management uses its best judgment in estimating the fair value of
these financial instruments, there are inherent limitations in any estimation
technique. Therefore, these fair value estimates are not necessarily indicative
of the amounts that the Company would realize in a market transaction. The
following fair value balance sheet does not represent an estimate of the overall
market value of the Company as a going concern, which would take into account
future business opportunities.

<TABLE>
<CAPTION>
JUNE 30, 1997 DECEMBER 31, 1996 MARCH 31, 1996 DECEMBER 31, 1995
------------------------- ------------------------- ------------------------- -------------------------
CARRYING FAIR CARRYING FAIR CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE VALUE VALUE VALUE VALUE
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Cash, cash
equivalents,
and restricted
cash
equivalents... $ 7,676,293 $ 7,676,293 $ 7,794,593 $ 7,794,593 $ 6,358,463 $ 6,358,463 $ 6,060,153 $ 6,060,153
Mortgage-backed
securities.... 3,880,149 3,878,210 3,909,863 3,898,019 3,888,488 3,950,804 3,892,805 3,988,943
Mortgage loans
held for
sale.......... 21,645,878 21,645,878 40,262,782 40,262,782 23,116,296 23,116,296 32,461,676 32,461,676
Servicing
rights........ 22,921,152 43,189,982 22,460,014 28,549,292 8,477,403 19,135,431 8,465,663 15,400,381
Liabilities:
Warehouse line
of credit..... 20,870,491 20,870,491 39,924,736 39,924,736 22,660,974 22,660,974 31,830,868 31,830,868
Servicing
acquisition
line of
credit........ 5,961,745 5,961,745 6,211,745 6,211,745 6,412,764 6,412,764 6,439,114 6,439,114
Notes payable... -- -- -- -- 5,034,000 5,034,000 5,034,000 5,034,000
Off-balance sheet
instruments:
Commitments to
extend
credit........ -- -- -- -- -- -- -- --
</TABLE>

The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
the value.

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH EQUIVALENTS

For cash, cash equivalents, and restricted cash equivalents, the carrying
amount is a reasonable estimate of fair value due to the relatively short time
between the origination of the instruments and their expected realization.

MORTGAGE-BACKED SECURITIES

The fair value of the mortgage-backed securities is estimated based on bid
quotations received from securities dealers.

MORTGAGE LOANS HELD FOR SALE

For mortgage loans held for sale, fair value was estimated based on
outstanding commitments from investors or current inventory yield requirements
calculated on an aggregate basis.

SERVICING RIGHTS

The estimated fair value was determined using a discounted cash flow
valuation model incorporating prepayment, default, cost to service, and interest
rate assumptions of the underlying loans.

WAREHOUSE LINE OF CREDIT AND SERVICING ACQUISITION LINE OF CREDIT

The estimated fair value of the warehouse line of credit and servicing
acquisition line of credit, both of which are short-term liabilities,
approximates their carrying values.

F-22
<PAGE> 82

THE WMF GROUP, LTD. AND SUBSIDIARY
(FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF JUNE 30, 1997 (UNAUDITED), DECEMBER 31, 1996, JUNE 30, 1996 (UNAUDITED),
MARCH 31, 1996, AND DECEMBER 31, 1995

12. DISCLOSURES OF FAIR VALUE OF FINANCIAL INSTRUMENTS -- (CONTINUED)

NOTES PAYABLE

The estimated fair value of the notes payable approximates their carrying
values as the notes were paid off on April 1, 1996, at carrying value.

COMMITMENTS TO EXTEND CREDIT

The fair value of commitments is estimated using the fees currently charged
to enter into similar agreements, taking into account the remaining terms of the
agreements and the present creditworthiness of the counter parties. For
fixed-rate loan commitments, fair value also considers the difference between
current levels of interest rates and the committed rates.

13. BALANCE SHEET CLASSIFICATION:

The Company prepares its consolidated balance sheet using an unclassified
balance sheet presentation as is customary in the mortgage banking industry. A
classified presentation would have aggregated current assets, current
liabilities, and net working capital as follows:

JUNE 30, DECEMBER 31, MARCH 31, DECEMBER 31,
1997 1996 1996 1995
----------- ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Current assets.................... $32,074,093 $ 51,343,755 $ 34,361,555 $ 41,740,490
Current liabilities............... 34,967,647 52,762,432 30,214,856 38,907,624
----------- ------------ ------------ ------------
Net working capital............... $(2,893,554) $ (1,418,677) $ 4,146,699 $ 2,832,866
=========== ============ ============ ============
</TABLE>

14. PRO FORMA PRESENTATION (UNAUDITED):

The unaudited pro forma income statement has been presented to reflect
results of operations for the twelve months ended December 31, 1996 as if the
acquisition of Holdings by NHP had occurred on January 1, 1996. The adjustments
to the period April 1, 1996, to December 31, 1996, include (1) income from
January 1, 1996, through March 31, 1996, of the acquired entity, and (2) an
additional three months of amortization of the purchase accounting adjustments
for the period January 1, 1996, through March 31, 1996. The following table
summarizes these pro forma adjustments:

<TABLE>
<CAPTION>
HISTORICAL
--------------------------
FOR THE FOR THE PRO FORMA
PERIOD PERIOD FOR
APRIL 1, JANUARY 1, THE YEAR
1996 TO 1996 TO THREE MONTHS ENDED
DECEMBER 31, MARCH 31, ADDITIONAL DECEMBER 31,
1996 1996 AMORTIZATION 1996
------------ ---------- ------------ ------------
<S> <C> <C> <C> <C>
Revenue.................................... $ 23,473,169 $6,827,942 $ -- $ 30,301,111
------------ ---------- ------------ ------------
Amortization/Depreciation.................. 3,981,704 551,495 575,647 5,108,846
Other expenses............................. 18,336,300 5,971,238 -- 24,307,538
------------ ---------- ------------ ------------
Total expenses........................ 22,318,004 6,522,733 575,647 29,416,384
------------ ---------- ------------ ------------
Net income............................ $ 1,155,165 $ 305,209 $ (575,647) $ 884,727
============ ========== ========== ============
</TABLE>

F-23
<PAGE> 83

THE WMF GROUP, LTD. AND SUBSIDIARY
(FORMERLY NHP FINANCIAL SERVICES, LTD., AND SUBSIDIARY AND
FORMERLY WMF HOLDINGS LTD. AND SUBSIDIARIES)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
AS OF JUNE 30, 1997 (UNAUDITED), DECEMBER 31, 1996, JUNE 30, 1996 (UNAUDITED),
MARCH 31, 1996, AND DECEMBER 31, 1995

15. SUBSEQUENT EVENTS ON APRIL 21, 1997, MAY 5, 1997, MAY 9, 1997 AND
RETROACTIVE APPLICATION OF STOCK SPLIT (OCTOBER 3, 1997):

Apartment Investment and Management Company ("AIMCO"), a wholly-owned
subsidiary of AIMCO and NHP have entered into an Agreement and Plan of Merger,
dated as of April 21, 1997 (the "Merger Agreement") pursuant to which the AIMCO
subsidiary will, subject to the terms and conditions provided in the Merger
Agreement, merge with and into NHP (the "Merger"), thereby making NHP, as the
surviving corporation, a wholly-owned subsidiary of AIMCO (the "Surviving
Corporation"). In addition, AIMCO purchased 51 percent of the shares of NHP
Common Stock on May 5, 1997 pursuant to a stock purchase agreement among AIMCO,
Demeter Holdings Corporation and Capricorn Investors, L.P. ("Capricorn"). AIMCO
required that a rights distribution occur as a condition to the Merger. On May
9, 1997, NHP distributed to each holder of record of NHP Common Stock at the
close of business on May 2, 1997, one right (a "Right") for each outstanding
share of NHP Common Stock (the "Rights Distribution"). Each Right entitles the
holder to receive from the Company, or any successor thereof, a distribution
(the "Share Distribution" and, with the Rights Distribution, the "Distribution")
of one-third of a share of Company Common Stock, subject to the terms of a
Rights Agreement, dated as of April 21, 1997 (the "Rights Agreement") between
NHP, the Company and The First National Bank of Boston, as Rights Agent. The
Rights distributed on May 9, 1997 are evidenced by the certificates of NHP
Common Stock then outstanding. NHP Common Stock issued after May 9, 1997 and
prior to the Maturity Time (as defined below) will have a legend and reference
to the Rights Agreement. Subject to certain conditions, the Rights will mature
at the earlier of (I) the effective time of the Merger (as defined below) and
(ii) December 1, 1997 (such time being referred to as the "Maturity Time").
Capricorn Investors II, L.P., whose general partner is managed by the person who
controls the general partner of Capricorn, has entered into a commitment
pursuant to which it would, following the negotiation and execution of
definitive documentation and subject to the satisfaction of the conditions that
will be specified therein, purchase 546,448 shares of Company common stock at
the time of the Share Distribution for a price of $9.15 per share. The Merger
Agreement requires NHP to contribute to the Company an amount equal to NHP's
Free Cash Flow (as defined) since February 1, 1997 to the extent such amount
exceeds Merger transaction costs.

Pursuant to the Rights Agreement, NHP will distribute all of the issued and
outstanding shares of the Company's Common Stock held by NHP to holders of
Rights as governed by the Rights Agreement ("Share Distribution"). NHP
Stockholders will receive cash in respect of fractional shares of Company Common
Stock that would otherwise be distributed at the rate of $9.15 per sharer of
Company Common Stock. The NHP stockholders will not be required to pay any
consideration for the shares of Company Common Stock they receive in the Share
Distribution. The Company's Board of Directors has approved a stock split of
approximately 789.94 per share. In addition, the Company's Board of Directors
has approved the issuance of additional shares to NHP immediately prior to the
Share Distribution so that the number of shares of the Company Common Stock held
by NHP at the time of the Share Distribution is equal to exactly one-third of
the issued and outstanding shares of NHP Common Stock at such time. The split
has been applied retroactively to all periods presented.

F-24
<PAGE> 84

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCES AND DISTRIBUTION

The following table sets forth the fees and expenses payable by the Company
in connection with the issuance and distribution of the securities other than
underwriting discounts and commissions. All of such expenses except the
Securities and Exchange Commission registration fee are estimated:

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............... $ 6,964
Nasdaq Fees....................................................... $ 32,745
Printing Expense*................................................. $185,000
Accounting Fees and Expenses*..................................... $223,000
Legal Fees and Expenses*.......................................... $200,000
Miscellaneous*.................................................... $ 27,290
--------
Total*.................................................. $675,000
========
</TABLE>

-----------------------
* Estimated

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law (the "DGCL") empowers
the Company to indemnify, subject to the standards set forth therein, any person
in connection with any action, suit or proceeding brought before or threatened
by reason of the fact that the person was a director, officer, employee or agent
of such company, or is or was serving as such with respect to another entity at
the request of such company. The DGCL also provides that the Company may
purchase insurance on behalf of any such director, officer, employee or agent.

Reference is made to Section 102(b)(7) of the DGCL, which enables a
corporation in its original certificate of incorporation or an amendment thereto
to eliminate or limit the personal liability of a director for violations of the
director's fiduciary duty, except (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 174 of the DGCL (providing for liability of
directors for the unlawful payment of dividends or unlawful stock purchases or
redemptions) or (iv) for any transaction from which a director derived an
improper personal benefit.

Article Seventh of the Company's Restated Certificate of Incorporation and
Article VI, Section 1 of the Company's By-laws, each of which has been filed as
an exhibit to this Information Statement/Prospectus and each of which is
incorporated herein by reference, provide in effect for the indemnification by
the Company of each director and officer of the Company to the fullest extent
permitted by applicable law.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

None.

ITEM 16. EXHIBITS

See index to exhibits at E-1.

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 14 above or otherwise,
the registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of

II-1
<PAGE> 85

expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.

II-2
<PAGE> 86

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF VIENNA,
COMMONWEALTH OF VIRGINIA, ON THE 30TH DAY OF OCTOBER, 1997.

THE WMF GROUP, LTD.

By: /s/ MICHAEL D. KETCHAM

------------------------------------
Name: Michael D. Ketcham
Title: Senior Vice President and
Treasurer

Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- ----------------------------------------------------
<S> <C> <C>
* Chairman of the Board October 30, 1997
- ----------------------------------------
J. RODERICK HELLER, III

* Director, President and Chief October 30, 1997
- ---------------------------------------- Executive Officer
SHEKAR NARASIMHAN

* Director October 30, 1997
- ----------------------------------------
MOHAMMED A. AL-TUWAIJRI

* Director October 30, 1997
- ----------------------------------------
TIM R. PALMER

* Director October 30, 1997
- ----------------------------------------
JOHN D. REILLY

* Senior Vice President October 30, 1997
- ---------------------------------------- and Treasurer
MICHAEL D. KETCHAM (principal financial officer)

* Controller October 30, 1997
- ---------------------------------------- (principal accounting officer)
MATHEW J. WHELAN, III

*By: /s/ MICHAEL D. KETCHAM
- ----------------------------------------
MICHAEL D. KETCHAM
ATTORNEY-IN-FACT
</TABLE>

II-3
<PAGE> 87

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------------------------------
<S> <C>
2.1 -- Rights Agreement dated as of April 21, 1997 by and between NHP Incorporated,
NHP Financial Services, Ltd. and The First National Bank of Boston (1).
3.1* -- Restated Certificate of Incorporation of The WMF Group, Ltd.
3.2* -- By-laws of The WMF Group, Ltd.
3.3 -- Amendment to the Company's Restated Certificate of Incorporation.
4.1 -- Form of certificate representing shares of Common Stock of The WMF Group, Ltd.
5 -- Opinion of Wilmer, Cutler & Pickering regarding legality of securities being
offered dated October 30, 1997.
8 -- Tax Opinion of Wilmer, Cutler & Pickering, dated October 30, 1997.
10.1* -- Mortgage Selling and Servicing Contract between Fannie Mae and the Company,
dated December 21, 1990.
10.2* -- Delegated Underwriting and Servicing Addendum to Mortgage Selling and Servicing
Contract between Fannie Mae and the Company, dated as of March 1, 1994.
10.3* -- Delegated Underwriting and Servicing Master Loss Sharing Agreement between
Fannie Mae and the Company, dated as of March 1, 1994.
10.4* -- Delegated Underwriting and Servicing Reserve Agreement among Fannie Mae, State
Street Bank and Trust Company and the Company, dated as of June 4, 1996.
10.5* -- Credit and Security Agreement between the Company, WMF/Huntoon and Residential
Funding Corporation, dated as of June 14, 1996.
10.6* -- First Amendment to Credit and Security Agreement between the Company,
WMF/Huntoon, Page Associates Limited and Residential Funding Corporation, dated
as of August 8, 1996.
10.7* -- Second Amendment to Credit and Security Agreement between the Company,
WMF/Huntoon, Page Associates Limited and Residential Funding Corporation, dated
as of December 20, 1996.
10.8* -- Third Amendment to Credit and Security Agreement between the Company,
WMF/Huntoon, Page Associates Limited and Residential Funding Corporation, dated
as of May 12, 1997.
10.9* -- Warehouse Promissory Note between the Company, WMF/Huntoon, Page Associates
Limited and Residential Funding Corporation, dated June 14, 1996.
10.10* -- Term Loan Promissory Note between the Company, WMF/Huntoon, Page Associates
Limited and Residential Funding Corporation, dated June 14, 1996.
10.11* -- Servicing Facility Promissory Note between the Company, WMF/Huntoon, Page
Associates Limited and Residential Funding Corporation, dated June 14, 1996.
10.12* -- Waiver of Section 2.1(b)(5) of the Warehousing Credit and Security Agreement by
Residential Funding Corporation, dated February 27, 1997.
10.13* -- Letter Agreement dated October 25, 1996 between Washington Mortgage Financing
Group and Michael D. Ketcham.
10.14 -- Key Employee Incentive Plan.
10.15 -- Key Employee Incentive Award Agreement.
10.16 -- Key Employee Referral Compensation Plan.
10.17 -- Employee Stock Purchase Plan.
11* -- Statement re computation of per share earnings.
16* -- Letter re change in certifying accountant.
21* -- Subsidiaries of the registrant.
23.1 -- Consent of Wilmer, Cutler & Pickering contained in Exhibits 5 and 8 hereto.
23.2 -- Consent of Arthur Andersen LLP, independent certified public accountants.
23.3 -- Consent of KPMG Peat Marwick LLP, independent certified public accountants.
23.4** -- Consent of Michael R. Eisenson to be named as a director.
23.5** -- Consent of Herbert S. Winokur, Jr. to be named as a director.
24** -- Power of attorney for the Company (included in signature page of registration
statement).
27* -- Financial data schedule.
</TABLE>

- ---------------
(1) Incorporated by reference to Exhibit 2.2 to Current Report on Form 8-K of
NHP Incorporated filed April 24, 1997.

* Incorporated by reference to the registration statement on Form 10
previously filed by the registrant on August 4, 1997.

** Previously filed.

E-1

<PAGE> 1
EXHIBIT 3.3

CERTIFICATE OF AMENDMENT
OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF
THE WMF GROUP, LTD.

The WMF Group, Ltd. (the "Corporation"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "General Corporation Law"), hereby certifies as follows:

1. The name of the Corporation is The WMF Group, Ltd. The original
Certificate of Incorporation of the Corporation was filed by the Corporation
(formerly known as WMF Holdings Ltd.) with the Secretary of State of Delaware
on October 20, 1992. The Corporation (formerly known as NHP Financial Services,
Ltd.) has previously filed a Restated Certificate of Incorporation (the
"Certificate") further amending the original Certificate of Incorporation on
May 14, 1997.

2. This Amendment further amends the Certificate, was duly adopted in
accordance with the provisions of Section 242 of the General Corporation Law,
and was approved by the unanimous written consent of the stockholders of the
Corporation given in accordance with the provisions of Section 228 of the
General Corporation Law.

3. The Certificate is hereby amended, effective as of the filing of
this Amendment or as soon thereafter as possible under Section 203 of the
General Corporation Law, by adding a new Article Tenth as follows:

ARTICLE TENTH

The Corporation expressly elects not to be governed by the
restrictions contained in Section 203 of the Delaware General
Corporation Law, as the same may be amended and supplemented.

IN WITNESS WHEREOF, the undersigned has caused this Amendment to be duly
executed on behalf of the Corporation as of October 21, 1997.

THE WMF GROUP, LTD.

By: /s/ SHEKAR NARASIMHAN
---------------------------------
Shekar Narasimhan
President

<PAGE> 1
EXHIBIT 4.1

[WMF LOGO]

THE WMF GROUP
WASHINGTON MORTGAGE - WMF HUNTOON PAIGE

THE WMF GROUP, LTD.

NUMBER SHARES

WMFG

COMMON STOCK COMMON STOCK

PAR VALUE $.Ol CUSIP 929289 10 6
SEE REVERSE FOR CERTAIN DEFINITIONS

INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFICATE IS TRANSFERABLE IN THE CITIES OF BOSTON, MA. AND NEW YORK, N.Y.

THIS CERTIFIES THAT

SPECIMEN

IS THE OWNER OF

FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK OF

THE WMF Group, LTD., transferable on the books of the Corporation by the holder
hereof in person or by duly authorized attorney upon surrender of this
Certificate properly endorsed. This Certificate and the shares represented
hereby are issued and shall be subject to all of the provisions of the Restated
Certificate of Incorporation and By-Laws of the Corporation, each as from time
to time amended, to all of which the holder by acceptance hereof assents. This
Certificate is not valid until countersigned and registered by the Transfer
Agent and Registrar.

Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.

Dated:

/s/ BARBARA EKSTROM /s/ SHEKAR NARASIMHAN
SECRETARY PRESIDENT

Countersigned and Registered
BANKBOSTON, N.A.
(BOSTON)
Transfer Agent
and Registrar,
By /s/ MARY PENZIC

Authorized Officer

<PAGE> 2

THE WMF GROUP, LTD.

The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

<TABLE>
<S> <C>
TEN COM -as tenants in common UNIF GIFT MIN ACT - ........ Custodian..........
(Cust) (Minor)
TEN ENT -as tenants by the entireties under Uniform Gifts to Minors

JT TEN -as joint tenants with right Act........................
of survivorship and not as (State)
tenants in common
</TABLE>

Additional abbreviations may also be used though not in the above list.

For value received, ........... hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
INDENTIFYING NUMBER OF ASSIGNEE
--------------------------------------
| |
-------------------------------------- ......................................

..............................................................................
(Please print or typewrite name and address including postal zip code of
assignee)

..............................................................................

...................................................................... Shares
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint ...........................................

.................................................................... Attorney
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.

Dated: ...........................

................................................

NOTICE: The signature to this assignment must correspond with the name
as written upon the face of the Certificate, in every particular, without
alteration or enlargement or any change whatever.

<PAGE> 1
EXHIBIT 5

[WILMER, CUTLER & PICKERING LETTERHEAD]

October 30, 1997

The WMF Group, Ltd.
1593 Spring Hill Road
Vienna, Virginia 22182

Re: The WMF Group, Ltd. Registration Statement on Form S-1

Dear Ladies and Gentlemen:

We have acted as counsel to The WMF Group, Ltd., a Delaware corporation
(the "Company"), in connection with a registration statement on Form S-1 (the
"Registration Statement") to be filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended.
The Registration Statement relates to the registration of the shares of Common
Stock of the Company, par value $0.01 per share (the "Shares"), to be
distributed as a dividend to shareholders of NHP Incorporated, a Delaware
corporation, pursuant to a Rights Agreement, dated as of April 21, 1997 between
NHP Incorporated, the Company and The First National Bank of Boston to
effectuate The WMF Group, Ltd.'s spin-off from NHP Incorporated (the
"Spin-Off"). Subject to certain conditions, the Shares will be distributed at
the earlier of (i) the effective time of the merger between NHP Incorporated
and a wholly-owned subsidiary of Apartment Investment and Management Company
("AIMCO") and (ii) December 1, 1997 (such time being the "Share
Distribution"). For the purposes of this opinion, we have examined and relied
upon such documents, records, certificates and other instruments as we have
deemed necessary.

Based solely upon the foregoing, and upon our examination of such
questions of law and statutes as we have considered necessary or appropriate,
and subject to the assumptions, qualifications, limitations and exceptions set
forth herein, we are of the opinion that (i) the Shares have been lawfully and
duly authorized; and (ii) such Shares have been or at the time of the Share
<PAGE> 2
The WMF Group, Ltd.
October 30, 1997
Page 2

Distribution will be validly issued, fully paid and nonassessable.

We are members of the bar of the State of Maryland and the District of
Columbia and do not hold ourselves out as being experts in the law of any other
state. This opinion is limited to the laws of the United States and the
General Corporation Law of Delaware. Although we do not hold ourselves out as
being experts in the laws of Delaware, we have made an investigation of such
laws to the extent necessary to render our opinion. Our opinion is rendered
only with respect to the laws and the rules, regulations and orders thereunder
that are currently in effect.

We assume no obligation to advise you of any changes in the foregoing
subsequent to the delivery of this opinion. This opinion has been prepared for
your use in connection with the filing of the Registration Statement on
October 30, 1997, and should not be quoted in whole or in part or otherwise be
referred to, nor otherwise be filed with or furnished to any governmental
agency or other person or entity, without our express prior written consent.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name therein under the caption
"Legal Matters."

Sincerely,

WILMER, CUTLER & PICKERING

By: /s/ RICHARD W. CASS
----------------------------
Richard W. Cass, a partner

<PAGE> 1
EXHIBIT 8

[WILMER, CUTLER & PICKERING LETTERHEAD]

October 30, 1997

NHP Incorporated
Suite 400
8065 Leesburg Pike
Vienna, VA 22182-2738

Ladies and Gentlemen:

We have acted as tax counsel to NHP Incorporated ("NHP") in connection
with the preparation and filing with the Securities and Exchange Commission
(the "Commission") of a Registration Statement on Form S-1 (the "Registration
Statement") pursuant to the Securities Act of 1933, as amended, for the
registration of Securities, which are described in the Information
Statement/Prospectus that forms a part of the Registration Statement (the
"Information Statement"). All capitalized terms not otherwise defined herein
shall have the same meaning ascribed to such terms in the Information
Statement.

We have examined copies of the following documents: (1) the
Registration Statement, including the Information Statement; (2) the Rights
Agreement; (3) the Merger Agreement; and (4) such other documents as we have
deemed relevant for purposes of the opinion set forth herein.

In our examination of such documents, we have assumed, without
independent inquiry, the genuineness of all signatures, the proper execution of
all documents, the authenticity of all documents submitted to us as originals,
the conformity to originals of all documents submitted to us as copies, the
authenticity of the originals of any such copies, and the legal capacity of all
<PAGE> 2
NHP Incorporated
October 30, 1997
Page 2

natural persons. We have also assumed that all NHP Stockholders hold their NHP
Common Stock as a capital asset and the opinion does not deal with special
situations, such as those of dealers in securities or currencies, financial
institutions, insurance companies, persons holding the Company Common Stock as
part of a hedging or conversion transaction or a straddle, persons whose
"functional currency" is not the U.S. dollar, foreign investors, and certain
U.S. expatriates.

Based on and subject to the foregoing, it is our opinion that:

Effect of the Rights Distribution and Maturity of the Rights on NHP

(1) NHP will recognize gain for federal income tax purposes as a
result of the Rights Distribution combined with the later maturity of the
Rights.

(2) The amount of gain recognized by NHP will be the excess of the
fair market value of the Company Common Stock over NHP's tax basis in the
Company Common Stock.

(3) The gain recognized by NHP will be capital gain.

Effect of the Rights Distribution and Maturity of the Rights on NHP
Stockholders

(4) Although the matter is not free from doubt, the Rights
Distribution should be treated as a taxable event for federal income tax
purposes on the Rights Distribution Date.

Assuming the Rights Distribution is treated as a taxable event on the
Rights Distribution Date:

(5) The Rights Distribution will be a dividend to the extent of
the current and accumulated earnings and profits of NHP.

(6) The portion of the Rights Distribution in excess of the amount
treated as a dividend will be treated as a tax free return of basis to the
extent of an NHP Stockholder's basis in NHP Common Stock and as capital gain to
the extent such portion exceeds the NHP Stockholder's basis in NHP Common
Stock.

(7) An NHP Stockholder's basis in NHP Common Stock will be reduced
(but not below zero) by the portion of the Rights Distribution in excess of the
amount treated as a dividend.

(8) An NHP Stockholder will have basis in the Rights equal to the
amount of the Rights Distribution to such stockholder.
<PAGE> 3
NHP Incorporated
October 30, 1997
Page 3

(9) The maturity of the Rights will not be taxable event.

(10) An NHP Stockholder will have basis in the Company Common Stock
equal to such stockholder's basis in the Rights prior to the maturity of the
Rights.

The foregoing opinion is based on relevant provisions of the Internal
Revenue Code of 1986, as amended, the Treasury Regulations issued thereunder,
court decisions, and administrative determinations as currently in effect, all
of which are subject to change, prospectively or retroactively, at any time.
We undertake no obligation to update or supplement this opinion to reflect any
changes in laws that may occur after the date hereof.

This opinion has been prepared for your use in connection with the
filing of the Registration Statement and should not be quoted in whole or in
part or otherwise be referred to, nor otherwise be filed with or furnished to
any governmental agency or other person or entity, without our express prior
written consent.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name therein under the headings
"Federal Income Tax Consequences of the Rights Distribution and the Maturity of
the Rights" and "Legal Matters" in the Information Statement.

Very Truly Yours,

WILMER, CUTLER & PICKERING

By: /s/ WILLIAM J. WILKINS
---------------------------------
William J. Wilkins
A Partner

<PAGE> 1

EXHIBIT 10.14

KEY EMPLOYEE INCENTIVE PLAN

THE WMF GROUP LTD.

1. PURPOSE OF THE PLAN AND DEFINITIONS

1.1 PURPOSE. The purpose of this Key Employee Incentive Plan ("the
Plan") of The WMF Group, Ltd. (the "Company") is to:

(a) furnish incentives to individuals chosen to receive
stock-based awards because they are considered capable of responding by
improving operations and increasing profits and shareholder value;

(b) encourage selected persons to accept or continue
employment with the company; and increase the interest of key executives in the
company's welfare through their participation in the growth in value of the
Company's Shares.

To accomplish these purposes, this Plan provides a means whereby
executives and key employees, board members, and other enumerated persons may
receive Awards.

1.2 DEFINITIONS. For purposes of this Plan, the following terms
have the following meanings:

"AFFILIATE" means a parent or subsidiary entity, to be interpreted in
accordance with the comparable terms "parent" and "subsidiary" corporation in
the applicable provisions (currently Section 424) of the Code at the time this
definition is being applied.

"AWARD" means any award under this Plan, including any grant of Option,
Shares or Director Options.

"AWARD AGREEMENT" means, with respect to each Award, the written
agreement executed by the Company and the Participant or other written document
approved by the Committee setting forth the terms and conditions of the Award.

"BOARD" means the Board of Directors of the Company.

"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.

"COMMISSION" means the Securities and Exchange Commission and any
successor agency.

<PAGE> 2

"COMMITTEE" has the meaning given it in Section 4.1.

"COMMON SHARES" or "SHARES" means common share of beneficial interest
of the Company, par value $0.01 per share.

"COMPANY" has the meaning given it in Section 1.1.

"DIRECTOR" means a person duly elected or appointed and serving as a
Director of the Company in accordance with the by-laws of the Company.

"DIRECTOR OPTIONS" has the meaning given it in Section 5.3.

"EMPLOYEE" has the meaning ascribed to it for purposes of Section
3401(c) of the Code and the Treasury Regulations adopted under that Section.

"EMPLOYMENT TERMINATION" means that a Participant has ceased, for any
reason and with or without cause, to be an Employee or Director of, or a
consultant to, the Company or any Affiliate of the Company. However, the term
"Employment Termination" shall not include a Non-Employee Director ceasing to
be a Director or a transfer of a Participant from the Company to an Affiliate
or vice versa, or from one Affiliate to another, or a leave of absence duly
authorized by the Company unless the Committee has provided otherwise.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.

"EXERCISE NOTICE" has the meaning given it in Section 6.1(h).

"GRANT DATE" has the meaning given it in Section 6.1(d).

"INCENTIVE STOCK OPTION" or "ISO" mean any Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422 of
the Code or successor provision.

"NON-EMPLOYEE DIRECTOR" means a person who qualifies as a "Non-Employee
Director" as defined in Rule 16b-3 and an "outside director" as defined in
Treasury Regulation 1.162-27(e)(3) and any successor Treasury Regulation.

"NON-QUALIFIED STOCK OPTION" or "NQO" means any Option that is not an
Incentive Stock Option.

"OPTION" means an option granted under Section 5.

Page 2
<PAGE> 3

"PARTICIPANT" means an eligible person who is granted an Award.

"PLAN" means this Key Employee Incentive Plan.

"PERFORMANCE SHARE AWARD" means an Award granted under Section 5.4

"RULE 16B-3" means Rule 16b-3 adopted under Section 16(b) of the
Exchange Act or any successor rule, as it may be amended from time to time, and
references to paragraphs or clauses of Rule 16b-3 refer to the corresponding
paragraphs or clauses of Rule 16b-3 as it exists at the Effective Date or the
comparable paragraph or clause of Rule 16b-3 or successor rule, as that
paragraph or clause may thereafter be amended.

"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time, and any successor statute.

"TEN PERCENT SHAREHOLDER" means any person who, at the time this
definition is being applied, owns directly or indirectly (or is treated as
owning by reason of attribution rules currently set forth in Section 424 of the
Code or any successor statute), shares of the Company constituting more than
ten percent (10%) of the total combined voting power of all classes of
outstanding shares of the Company or of any Affiliate of the Company.

2. ELIGIBLE PERSONS

Every person who, at or as of the Grant Date, is (a) an Employee of the
Company or an Affiliate of the Company, or (b) someone whom the Committee
designates as eligible for an Award (other than for Incentive Stock Options)
because the person (i) performs bona fide consulting or advisory services for
the Company or an Affiliate of the Company (other than services in connection
with the offer or sale of securities in a capital-raising transaction) and (ii)
has a direct and significant effect on the financial development of the Company
or an Affiliate of the Company, shall be eligible to receive Awards hereunder.
Directors of the Company who are not Employees are only eligible to receive
Director Options under Section 5.3.

3. SHARES SUBJECT TO THE PLAN

The total number of Shares that may be issued under Award, all or any
part of which may be issued to any Participant, is eight percent (8.00%) of the
total shares outstanding of the Company (provided, however, ISOs may not be
more than 368,000 Shares). Such Shares may consist, in whole or in part, of
authorized and unissued Common Shares or Shares reacquired in private
transactions or open market purchases, but all Shares issued under the Plan,
regardless of their source, shall be counted against said eight percent (8.00%)
Share limitation. Any Shares that are retained by the Company upon exercise or
settlement of an Award in order to satisfy the exercise price in whole or in
part, or to pay withholding taxes due with respect to such exercise

Page 3
<PAGE> 4

or settlement, shall be treated as issued to the Participant and will
thereafter not be available under the Plan. The number of Shares reserved for
issuance under this Plan is subject to adjustment in accordance with the
provisions for adjustment in this Plan.

4. ADMINISTRATION

4.1 COMMITTEE. This plan shall be administered by a committee (the
"Committee") appointed by the Board. The Committee shall be constituted so
that, as long as Shares are registered under Section 12 of the Exchange Act,
each member of the Committee shall be a Non-Employee Director. The number of
persons that shall constitute the Committee shall be determined from time to
time by a majority of all the members of the Board; provided, however, the
Committee shall not consist of fewer than two persons.

4.2 COMMITTEE'S POWERS. Subject to the express provisions of this
Plan and Rule 16b-3 (so long as it is applicable), the Committee shall have the
authority, in its sole discretion: (a) to adopt, amend and rescind
administrative and interpretive rules and regulation relating to the Plan; (b)
to determine the eligible persons to whom, and the time or times at which,
Award shall be granted; ( c ) to determine the number of Shares that shall be
the subject of each Award; (d) to determine the terms and provisions of each
Award Agreement (which need not be identical) and any amendments thereto,
including provisions defining or otherwise relating to (i) the period or
periods and extent of exercisability of any Option, (ii) the extent to which
the transferability of Shares issued or transferred pursuant to any Award is
restricted, (iii) the effect of Employment Termination on an Award, and (iv)
the effect of approved leaves of absence (consistent with applicable Treasury
Regulations); (e) to accelerate the time of exercisability of any Option; (f)
to construe the respective Award Agreements and the Plan; (g) to make
determinations of the fair market value of Shares; (h) to waive any provision,
condition or limitation set forth in an Award Agreement; (i) to delegate its
duties under the Plan to such agents as it may appoint from time to time,
provided, however, that the Committee may not delegate its duties with respect
to making or exercising discretion with respect to Awards to eligible persons
if such delegation would cause Awards not to qualify for the exemptions
provided by Rule 16b-3 (unless the Board expressly determines not to have
Awards under the Plan comply with Rule 16b-3); and (j) to make all other
determinations, perform all other acts and exercise all other powers and
authority necessary or advisable for administering the Plan, including the
delegation of those ministerial acts and responsibilities as the Committee
deems appropriate. Subject to Rule 16b-3 (so long as it is applicable), the
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan, in any Award or in any Award Agreement in the manner
and to the extent it deems necessary or desirable to implement the Plan, and
the Committee shall be the sole and final judge of that necessity or
desirability. The determinations of the Committee on the matters referred to
in this Section 4.4 shall be final and conclusive. Notwithstanding any
provision in the Plan to the contrary, Awards will be made to Non-Employee
Directors under Sections 5.3 and 8 of this Plan. In addition, notwithstanding
any provision of this Plan to the contrary, the Committee may not in any manner
exercise discretion under the Plan with respect to any Awards made to
Non-Employee Directors.

Page 4
<PAGE> 5

4.3 TERM OF PLAN No awards shall be granted under this Plan after
10 years from the Effective Date of this Plan.

5. GRANT OF OPTIONS

5.1 WRITTEN AGREEMENT. Each option shall be evidenced by an Award
Agreement. The Award Agreement shall specify whether each Option it evidences
is a NQO or an ISO.

5.2 ANNUAL $100,000 LIMITATION ON ISOS. To the extent that the
aggregate "fair market value" of Shares with respect to which ISOs first become
exercisable by a Participant in any calendar year exceeds $100,000 taking into
account ISOs granted under this Plan, the Options covering such additional
Shares becoming exercisable in that year shall cease to be ISOs and thereafter
be NQOs. For this purpose, the "fair market value" of the ISOs shall be
determined as of the Grant Date of the Options. In reducing the number of
Options treated as ISOs to meet this $100,000 limit, the most recently granted
Options shall be reduced first.

5.3 ANNUAL GRANTS TO NON-EMPLOYEE DIRECTORS. On the last day of
each calendar year beginning with the last day of 1997, each Non-Employee
Director who is then a member of the Board shall automatically be granted NQOs
to purchase 5,000 Shares. Each option referred to in the previous sentence is
referred to as a "Director Option." The exercise price of Director Options
shall be the fair market value of the Shares subject to the Option on the date
the Option is granted. Each Director Option shall be fully exercisable
commencing six months after the date of grant and continuing, unless sooner
terminated as provided in this Plan, for 10 years after the date it is granted.
If, for any reason other than death or permanent and total disability, a
Non-Employee Director ceases to be a member of the Board, each Director Option
held by that Non-Employee Director on the date that the Non-Employee Director
ceases to be a member of the Board may be exercised in whole or in part at any
time within one year after the date of such termination or until the expiration
of the Director Option, whichever is earlier. If a Non-Employee Director dies
or becomes permanently and totally disabled (within the meaning of Section
422(c)(6) of the Code) while a member of the Board (or within the period that
the Director Options remain exercisable after the Non-Employee Director ceases
to be a member of the Board), each Director Option then held by that
Non-Employee Director may be exercised, in whole or in part, by the
Non-Employee Director, by the Non-Employee Director's personal representative
or by the person to whom the Non-Employee Director transferred the Director
Option by will or the laws of descent and distribution, at any time within two
years after the date of death or permanent and total disability of the
Non-Employee Director or until the expiration date of the Director Option,
whichever is earlier. Nothing in this Section 5.3 or in Section 6.1(c) shall
have the effect of accelerating the six-month period during which Director
Options are not exercisable. Each Director Option shall be evidenced by an
Award Agreement.

5.4 GRANTS OF PERFORMANCE SHARE AWARDS. The Committee may, in its
discretion, grant Performance Share Awards to Eligible Employees. An Award
shall specify the maximum number (if any) of Common Shares, Options,
Restricted Shares (as may be defined herein or in the Key Employee Deferred
Compensation Plan of the Company) subject to the Performance

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Share Award and its terms and conditions. The Committee shall establish the
specified period (a "performance cycle") for the Performance Share Award and
the measure(s) of the performance of the Company (or any part thereof) or the
Participant. The Committee may, during the performance cycle, make such
adjustments to the measure(s) of performance as it may deem appropriate to
compensate for, or reflect, any significant changes that may occur in
accounting practices, tax laws, other laws or regulations that alter or affect
the computation of the measure(s). The Award Agreement shall specify how the
degree of attainment of the measure(s) over the performance cycle is to be
determined. The Committee may provide for full or partial credit, prior to
completion of such performance cycle or the attainment of the performance
achievement specified in the Award, in the event of the Participant's death.

6. CERTAIN TERMS AND CONDITIONS OF OPTIONS AND OTHER AWARDS

Each option shall be designated as an ISO or a NQO and shall be subject
to the terms and conditions set forth in Section 6.1. Notwithstanding the
foregoing, the Committee may provide for different terms and conditions in any
Award Agreement or amendment thereto as provided in Section 4.2.

6.1 ALL AWARDS. All Options and other Awards shall be subject to
the following terms and conditions:

(a) Changes in Capital Structure: If the number of
outstanding Shares is increased by means of a share dividend payable in Shares,
a share split or other subdivision or by a reclassification of Shares, then,
from and after the record date for such dividend, subdivision or
reclassification, the number and class of Shares subject to this Plan
(including without limitation its Sections 3, and 5.3) and each outstanding
Award shall be increased in proportion to such increase in outstanding Shares
and the then-applied exercise price of each outstanding Award shall be
correspondingly decreased. If the number of outstanding Shares is decreased by
means of a share split or other subdivision or by a reclassification of Shares,
then, from and after the record date for such split, subdivision or
reclassification, the number and class of Shares subject to this Plan
(including without limitation its Sections 3, and 5.3) and each outstanding
Award shall be decreased in proportion to such decrease in outstanding Shares
and the then-applicable exercise price of each outstanding Award shall be
correspondingly increased.

(b) Grant Date: Each Award Agreement shall specify the date
as of which it shall be effective (the "Grant Date").

(i) If the Shares are listed on any established stock
exchange or a national market system, including, without limitation, the
National Market System of the National Association of Securities Dealers
Automated Quotation System, its fair market value shall be the closing sales
price for the Shares, or the mean between the high bid and low asked prices if
no sales were reported, as quoted on such system or exchange (or, if the Shares
are listed

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on more than one exchange, then on the largest such exchange) for the date the
value is to be determined (or if there are no sales or bids for such date, then
for the last preceding business day on which there were sales or bids), as
reported in The Wall Street Journal or similar publication.

(ii) If the Shares are regularly quoted by a recognized
securities dealer but selling prices are not reported, its fair market value
shall be determined in good faith by the Committee, with reference to the
Company's net worth, prospective earning power, dividend-paying capacity and
other relevant factors, including the goodwill of the Company, the economic
outlook in the Company's industry, the Company's position in the industry and
its management, and the values of stock of other corporations in the same or
similar lines of business.

(d) Time of Exercise; Vesting: Awards may, in the sole
discretion of the Committee, be exercisable or may vest, and restrictions may
lapse, as the case may be, at such times and in such amounts as may be
specified by the Committee in the grant of the Award.

(e) Nonassignability of Rights: No Award that is a
derivative security (as defined in Rule 16a-1(c) under the Exchange Act) shall
be transferable other than with the consent of the Committee (which consent
will not be granted in the case of ISOs unless the conditions for transfer of
ISOs specified in the Code have been satisfied) or by will or the laws of the
descent and distribution or pursuant to a qualified domestic relations order as
defined by the Code or Title I of ERISA. Awards requiring exercise shall be
exercisable only by the Participant, assignees that were approved by the
Committee, executors, administrators or beneficiaries of the Participant (who
are the permitted transferees hereunder), guardians or members of a committee
for an incompetent Participant, or similar persons duly authorized by law to
administer the estate or assets of a Participant.

(f) Notice and Payment: To the extent it is exercisable, an
Award shall be exercisable only by written or recorded electronic notice of
exercise, in the manner specified by the Committee from time to time, delivered
to the Company or its designated agent during the term of the Award (the
"Exercise Notice"). The Exercise Notice shall: (a) state the number of Shares
with respect to which the Award is being exercised; (b) be signed by the holder
of the Award or by the person authorized to exercise the Award pursuant to
Section 6.1(c) and (e) include such other information, instruments and
documents as may be required to satisfy any other condition to exercise set
forth in the Award Agreement. Except as provided below, payment in full, in
cash or check, shall be made for all Shares purchased at the time notice of
exercise of an Award is given to the Company. The proceeds of any payment
shall constitute general funds of the Company. At the time an Award is granted
or before it is exercised, the Committee, in the exercise of its sole
discretion, may authorize any one or more of the following additional methods
of payment:

(i) for all Participants, acceptance of such
Participants' full recourse promissory note for some or all of the exercise
price of the Shares being acquired, payable on such terms and bearing such
interest rate as determined by the Committee, and secured in such manner, if at
all, as the Committee shall approve, including, without limitation, by a
security interest in the Shares which are the subject of the Award or other
securities;

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(ii) for all Participants, delivery by such
Participants of Shares of the Company already owned by such Participants for
all or part of the exercise price of the Award being exercised, provided that
the fair market value of such Shares are equal on the date of exercise to the
exercise price of the Award being exercised, or such portion thereof as the
Participants are authorized to pay and elect to pay by delivery of such Shares;

(iii) for all Participants, surrender by such
Participants, or withholding by the Company from the Shares issuable upon
exercise of the Award, of a number of Shares subject to the Award being
exercised with a fair market value equal to some or all of the exercise price
of the Shares being acquired, together with such documentation as the Committee
and the broker, if applicable, shall require; or

(iv) for all Participants, to the extent permitted by
applicable law, payment may be made pursuant to arrangements with a brokerage
firm under which that brokerage firm, on behalf of such Participants, shall pay
to the Company the exercise price of the Award being exercised (either as a
loan to the Participant or from the proceeds of the sale of Shares issued under
that Award), and the Company shall promptly cause the Shares being purchased
under the Award to be delivered to the brokerage firm. Such transactions shall
be effected in accordance with the procedures that the Committee may establish
from time to time.

If the exercise price is satisfied in whole or in part by the
delivery of Shares pursuant to paragraph (ii) above, the Committee may issue
to the Participant an additional Option, with terms identical to those set
forth in the option agreement governing the exercised Option, except for the
exercise price which shall be the fair market value used for such delivery and
the number of Shares subject to such additional Option shall be the number of
Shares so delivered.

(g) Termination of Employment: Any Award or portion thereof
which has not vested on or before the date of a Participant's Employment
Termination shall expire on the date of Employment Termination. As to an Award
or portion thereof that has vested by the time of Employment Termination, the
Committee shall establish, in respect of each Award when granted, the effect of
an Employment Termination on the rights and benefits thereunder and in so doing
may, but need not, make distinctions based upon the cause of termination (such
as retirement, death, disability or other factors) or which party effected the
termination (the employer or the Employee). Notwithstanding any other
provision in this Plan or the Award Agreement, the Committee may decide in its
discretion at the time of any Employment Termination (or within a reasonable
time thereafter) to extend the exercise period of an Award (but not beyond the
period specified in Section 6.2(b) or 6.3(b), as applicable) and not decrease
the number of Shares covered by the Award with respect to which the Award is
exercisable or vested.

(h) Death: Any Award or portion thereof which has not vested
on or before the date of the Participant's death shall expire on the date of
such Participant's death. As to an Award or portion thereof that has vested by
the date of death of the Participant, such Awards or

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portions thereof must be exercised within two years of the date of the
Participant's death by a person authorized under this Plan to exercise such
Awards.

(i) Payment of Dividends Upon Exercise of Options: Upon
exercise of an Option, the Participant shall be entitled to receive a cash
payment from the Company equal to the amount of dividends that have been paid
from the Grant Date of the Option through the date of exercise of the Option on
that number of Common Shares that is equal to the number of Common Shares being
purchased upon exercise of such Option.

(j) Other Provisions: Each Award Agreement may contain such
other terms, provisions and conditions not inconsistent with this Plan, as may
be determined by the Committee, and each ISO granted under this Plan shall
include such provisions and conditions as are necessary to qualify such Option
as an "incentive stock option" within the meaning of Section 422 of the Code,
unless the Committee determined otherwise.

(k) Withholding and Employment Taxes: At the time of
exercise of an Award, the lapse of restrictions on an Award or a disqualifying
disposition of Shares issued under an ISO (within the meaning of Section
6.3(c)), the Participant shall remit to the Company in cash all applicable
federal and state withholding and employment taxes. If and to the extent
authorized and approved by the Committee in its sole discretion, a Participant
may elect, by means of a form of election to be prescribed by the Committee, to
have Shares which are acquired upon exercise of an Award withheld by the
Company or tender other Shares owned by the Participant to the Company at the
time the amount of such taxes is determined, in order to pay the amount of such
tax obligations, subject to such limitations as the Committee determines are
necessary or appropriate to comply with Rule 16b-3 in the case of Participants
who are subject to Section 16(b).

(l) Named Officer Provisions: The Award Agreements for
Participants determined by the Committee to be named officers ("Named
Officers") shall contain the following terms and definitions:

Severance. If a Named Officer is terminated without
"cause" (as defined below), he or she will be paid his or her then current
salary for two years if he or she is the Chief Executive Officer, for one year
if he or she is an Executive Vice President, for six months if he or she is a
Senior Vice President, or for three months if he or she is a Group Vice
President. If there is a "transfer of control" of the Company (as defined
below) and such an employee is terminated within 180 days of such change, he or
she will be paid his or her then current salary for three years if he or she is
the Chief Executive Officer, for two years if he or she is an Executive Vice
President, for one year if he or she is a Senior Vice President, or for six
months if he or she is a Group Vice President.

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the failure of the Participant to perform his duties or responsibilities as
specified by the Company or any Affiliate of the Company, and (iv) the
inability of the Participant to perform his duties or responsibilities for a
period of more than one hundred twenty (120) consecutive days due to physical
or mental illness or incapacity.

Transfer of Control. For the purposes of this Agreement,
a "transfer of control" shall occur upon: (i) a transfer of a majority of the
Company's voting stock outstanding on the day of the transfer, (ii) sale of
substantially all of the Company's assets, to any entity or person unaffiliated
with the Company, (iii) the consolidation of the Company with or its merger
into any other unaffiliated corporation, or (iv) an act by the Company, or any
entity or person affiliated with the Company, which results in the dissolution
of the Company.

6.2 TERMS AND CONDITION TO WHICH ONLY NQOS ARE SUBJECT. Options
granted under this Plan which are designated as NQOs shall be subject to the
following terms and conditions:

(a) Exercise Price. The exercise price of a NQO shall be
determined by the Committee.

(b) Option Term. Unless an earlier expiration date is
specified by the Committee at the Grant Date, each NQO shall expire 10 years
after the Grant Date or, if required by applicable state securities laws in the
case of a NQO granted to a Ten Percent Shareholder, five years after the Grant
Date.

6.3 TERMS AND CONDITIONS TO WHICH ONLY ISOS ARE SUBJECT. Options
granted under this Plan which are designed as ISOs shall be subject to the
following terms and conditions:

(a) Exercise Price. The exercise price of an ISO shall be
determined in accordance with the applicable provisions of the Code and shall
in no event be less that 100% of the fair market value of the Shares covered by
the ISO at the Grant Date; provided, however, that the exercise price of an ISO
granted to a Ten Percent Shareholder shall not be less than 110% of such fair
market value.

(b) Option Term. Unless an earlier expiration date is
specified by the Committee at the Grant Date, each ISO shall expire 10 years
after the Grant Date; provided, however, that an ISO granted to a Ten Percent
Shareholder shall expire no later than five year after the Grant Date.

(c) Disqualifying Dispositions. If Shares acquired by
exercise of an ISO are disposed of within two years after the Grant Date or
within one year after the transfer of the Shares to the optionee, the holder of
the Shares immediately before the disposition shall promptly notify the Company
in writing of the date and terms of the disposition and shall provide such
other information regarding the disposition as the Company may reasonably
require

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and shall pay the Company any withholding and employment taxes which the
Company in its sole discretion deem applicable to the disposition.

(d) Termination of Employment. All vested ISOs must be
exercised within three months of the Employment Termination of the optionee
unless such Employment Termination is due to the employee being disabled
(within the meaning of Section 422 (c)(6) of the Code), in which case the ISO
shall be exercised within one year of the Employment Termination.

6.4 SURRENDER OF OPTIONS.. The Committee, acting in its sole
discretion, may include a provision in an option agreement allowing the
optionee to surrender the Option covered by the agreement, in whole or in part
in lieu of exercise in whole or in part, on any date that the fair market value
of the Shares subject to the Option exceeds the exercise price and the Option
is exercisable (to the extent being surrendered). The surrender shall be
effected by the delivery of the option agreement, together with a signed
statement which specifies the number of shares as to which the optionee is
surrendering the Option, together with a request for such type of payment.
Upon such surrender, the optionee shall receive (subject to any limitations
imposed by Rule 16b-3), at the election of the Committee, payment in cash or
shares, or a combination of the two, equal to (or equal in fair market value
to) the excess of the fair market value of the Shares covered by the portion of
the Option being surrendered on the date of surrender over the form of payment,
taking into account such factors as it deems appropriate. To the extent
necessary to satisfy Rule 16b-3, the Committee may terminate an optionee's
rights to receive payments in cash for fractional Shares. Any option agreement
providing for such surrender privilege shall also incorporate such additional
restrictions on the exercise or surrender of options as may be necessary to
satisfy the conditions of Rule 16b-3.

7. SECURITY LAWS

Nothing in this Plan or in any Award or Award Agreement shall require
the Company to issue any Shares with respect to any Award if, in the opinion of
counsel for the Company, that issuance could constitute a violation of the
Securities Act, any other law or the rules of any applicable securities
exchange or securities association then in effect. As a condition to the grant
or exercise of an Award, the Company may require the Participant (or, in the
event of the Participant's death, the Participant's legal representatives,
heirs, legates or distributes) to provide written representations concerning
the Participant's (or such other person's) intentions with regard to the
retention or disposition of the Shares covered by the Award and written
covenants as to the manner of disposal of such Shares as may be necessary or
useful to ensure that the grant, exercise or disposition will not violate the
Securities Act, and other law or any rule of any applicable securities exchange
or securities association then in effect. The Company shall not be required to
register any Shares under the Securities Act or register or qualify any Shares
under any state or other securities laws.

8. AMENDMENT, SUSPENSION AND TERMINATION OF PLAN

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The Board may at any time amend, suspend or discontinue this Plan
without shareholder approval, except as required by applicable law; provided,
however, that no amendment, alteration, suspension or discontinuation shall be
made which would impair the rights of any Participant under any Award
previously granted, without the Participant's consent, except to conform this
Plan and Awards granted to the requirements of federal or other tax laws
including without limitation Section 422 of the Code and/or ERISA, or to the
requirements of Rule 16b-3. The Board may choose to require that the Company's
shareholders approve any amendment to this Plan in order to satisfy the
requirements of Section 422 of the Code, Rule 16b-3 or for any other reason.

9. SEVERABILITY

If any provision of this Plan is held to be illegal or invalid for any
reason, that illegality or invalidity shall not affect the remaining portions
of the Plan, but such provision shall be fully severable and the Plan shall be
construed and enforced as if the illegal or invalid provision had never been
included in this Plan. Such an illegal or invalid provision shall be replaced
by a revised provision that most nearly comports to the substance of the
illegal or invalid provision.

10. EFFECTIVE DATE

This Plan was originally adopted by the Board of Directors on
October 14, 1997. It was approved in that form by the holders of the Company's
voting shares on October 14, 1997 (the earlier of which is the "Effective
Date").

I hereby certify that the foregoing is a full, true and correct copy of
the Key Employee Incentive Plan of The WMF Group Ltd., a Delaware Corporation,
as in effect on the date hereof.

Witness my hand and the seal of the Corporation.

Dated: October 14, 1997 /s/ BARBARA EKSTROM
------------------------- --------------------------------
Barbara Ekstrom, Secretary

(SEAL)

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<PAGE> 1
EXHIBIT 10.15

THE WMF GROUP, LTD.

KEY EMPLOYEE INCENTIVE AWARD AGREEMENT

This Key Employee Incentive Award Agreement (the "Agreement") is made
and entered into this _____ day of ____________, 1997 (the "Grant Date"), by
and between The WMF Group, Ltd. (hereinafter referred to as the "Company") and
_____________________________________, (hereinafter referred to as the
"Participant").

For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by the Company and the Participant, and pursuant
to and subject to all the terms and conditions set forth herein and in that Key
Employee Incentive Plan adopted by the Company as of ________________, 1997
(the "Plan"), a copy of which Plan is attached to this Agreement as EXHIBIT A,
and which Exhibit and all provisions thereof are incorporated into this
Agreement as an integral part thereof, the Company desires to grant to the
Participant, and the Participant desires to accept, an option to purchase
__________ shares of the Common Shares of the Company as specifically provided
in this Agreement (the "Option Shares"), and, accordingly, the Company and the
Participant agree upon the terms and provisions specified in this Agreement.

Unless specifically defined in this Agreement, all capitalized words
and phrases in this Agreement shall have the meaning ascribed to them in the
Plan.

1. Grant and Acceptance of Option; Vesting

(a) Subject to the terms and provisions of this Agreement and the
Plan, the Company grants to Participant the right and option to purchase
____________________ shares of Common Shares of the Company at a price of $9.15
per share, which is the Fair Market Value of the shares as of the Grant Date.
Participant hereby accepts the grant and agrees to all of the terms and
provisions of this Agreement and of the Plan. Unless otherwise specifically
provided in this Agreement, and so long as the Participant is employed by the
Company, the right and option granted herein shall vest and be exercisable by
the Participant as follows: twenty percent (20%) (______ shares) (ignoring
fractional shares) of the total number of Option Shares is vested as of the
date of this Agreement, with the remainder, i.e., eighty percent (80%) of the
total number of Option Shares, vesting annually in twenty percent (20%)
increments as follows: twenty percent (20%) (______ shares) is vested as of
_________________, 1998; twenty percent (20%) (______ shares) is vested as of
_________________, 1999; twenty percent (20%) (______ shares) is vested as of
_________________, 2000; and twenty percent (20%) (______ shares) is vested as
of _________________, 2001.

<PAGE> 2
(b) The specific option (hereinafter referred to as the "Option")
which is granted to Participant is intended to qualify as an incentive stock
option ("ISO") as such term is defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), and Participant acknowledges that when
the Option is exercised, the Participant may recognize income if and to the
extent the ascertainable fair market value of the Option Shares at the time the
Option is exercised is greater than the Option price. The Option is granted in
connection with Participant's employment and not in lieu of any salary or other
compensation for Participant's services.

(c) Notwithstanding anything in this Agreement to the contrary, the
Option shall vest immediately and in its entirety upon a transfer of control
(as hereinafter defined) of the Company. Further, notwithstanding anything in
this Agreement to the contrary, the Option shall vest immediately and in its
entirety, and expire and become null and void ninety (90) days after such
vesting, upon the termination without cause (as hereinafter defined) of the
Participant by the Company as an employee of the Company.

2. Period of Option; Certain Limitations on Right to Exercise

(a) Unless terminated earlier as otherwise provided in this
Agreement, the Option shall expire at 5:00 PM, Washington, D.C. time, on the
tenth (10th) anniversary of the date of this Agreement, viz., _____________,
2007 (the "Option Term"). The period of the Option may be reduced only in
connection with the termination of Participant's employment or as a result of
Participant's death, as provided in this Agreement and in the Plan.

(b) Participant may exercise the Option in whole or in part after
the Option is vested.

(c) Notwithstanding the above, any portion of the Option which has
not vested on or before the date of the Participant's death shall terminate and
become null and void as of the date of the Participant's death. As to any
portion of the Option which has vested by the date of death of the Participant,
such portion must be exercised within two (2) years of the date of the
Participant's death by a person authorized under the Plan to exercise the
portion, but in no event, however, shall any such period extend beyond the
Option Term.

3. Employment of Participant; Termination of Employment; Non-Competition

The Company and the Participant acknowledge, and each agrees, that: (i) the
services performed by the Participant as an employee of the Company are of a
special, unique, unusual, extraordinary, and intellectual character; (ii) the
Company's business is national in scope and its products and services are
marketed throughout the United States; (iii) the Company competes with other
businesses that are or could be located in any part of the United States; (iv)
the Company has required that the Participant make the covenants set forth in
this Agreement as specific consideration for and a condition to the
Participant's receipt of the grant

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<PAGE> 3

made by the Company to the Participant under this Agreement; and (v) the
provisions of this Agreement are reasonable and necessary to protect the
Company's business.

(a) Covenants of the Participant. In consideration of the
acknowledgments by the Participant, and in consideration of the grant of the
Option by the Company, the Participant covenants that :

(i) Confidentiality. The Participant shall keep confidential
any confidential information of the Employer which is now known to him or which
hereafter becomes known to him as a result of his employment by the Employer,
and shall not at any time directly or indirectly disclose any such information
to any person or firm or use the same in any way other than in connection with
the business of the Employer during, and at all times after termination of, the
employment by the Employer of the Participant. The Participant further agrees
that he will, upon termination of his employment by or with the Employer,
return to the Employer, all books, records, lists and other written, typed or
computer printed materials or data, and all copies thereof and excerpts
therefrom, whether furnished by the Employer or an affiliate of the Employer or
prepared by the Participant, which contain any confidential information
relating to the Employer's business, and the Participant agrees that he will
neither make nor retain any copies of such materials after termination of his
employment.

For the purposes of this Agreement, "confidential information"
shall mean, to the extent that such information is not generally known or
available to the public, any and all: (a) trade secrets concerning the business
and affairs of the Employer, data in all media and formats, processes, designs,
sketches, photographs, graphs, drawings and inventions, past, current, and
planned research and development, current and planned marketing or distribution
methods and processes, customer lists, current and anticipated customer
requirements, price lists, market studies, business plans, computer software
and programs (including object code and source code), computer software and
database technologies, systems, structures, and architectures, and any other
information, however documented, that is a trade secret generally within the
meaning of law; and (b) information concerning the business and affairs of the
Employer (which includes historical financial statements, financial projections
and budgets, historical and projected sales, capital spending budgets and
plans, the names and backgrounds of key personnel, personnel training and
techniques and materials, however documented; and (c) notes, analysis,
compilations, studies, summaries, and other material prepared by or for the
Employer containing or based, in whole or in part, on any information included
in the foregoing. For the purposes of this Agreement, customer lists shall not
include any list prepared by the Participant after the termination of his
employment or of this Agreement which are compiled by the Participant without
referring to any confidential information.

(ii) Non-competition; Non-solicitation. For the period during
which the Participant is employed by the Company, and for a period equal to the
longer of (x) one year thereafter, or (y) the period during which severance
payments are received by the Participant under Section _____ of this Agreement,
the Participant will not, directly or indirectly, either individually or as
owner, partner, agent, employee, consultant or otherwise, except for the
account of and on behalf of the Company:

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<PAGE> 4

(A) Engage in the multifamily, commercial, or
healthcare mortgage banking or mortgage servicing business in the United States
of America; or

(B) Solicit, or otherwise attempt to establish for
herself or any other person or firm, any business relationships competitive
with the Company with any person or firm which was a customer of the Company or
any affiliate of the Company at any time during one year preceding the
termination of the Participant's employment by the Company.

(b) Severance Payment. The Company may terminate the Participant's
services at any time and for any reason or no reason whatsoever by giving
thirty (30) days' written notice to the Participant. In the event the
Participant is terminated by the Company for any reason other than for cause,
as defined below, the Participant shall, be entitled to a severance payment in
an amount equal to ____________. The Participant shall not be entitled to any
severance payment in the event he is terminated by the Company for cause.

Cause. With respect to the termination of the Participant's employment
by the Company, "cause" means: (i) the engaging by the Participant in any act
of dishonesty in connection with the performance of his employment duties and
responsibilities, (ii) the final judgment of any United States federal or state
court convicting the Participant of a felony, (iii) the failure of the
Participant to perform his duties or responsibilities as specified by the
Company or any Affiliate of the Company, and (iv) the inability of the
Participant to perform his duties or responsibilities for a period of more than
one hundred twenty (120) consecutive days due to physical or mental illness or
incapacity.

(c) Payment of Severance. Any severance payments due under this
Section shall be paid, in equal monthly installments, over a period of
___________ months after the termination of employment of the Participant.

4. Transfer of Control/Dissolution and Termination

(a) Transfer of Control. For the purposes of this Agreement, a
"transfer of control" shall occur upon: (i) a transfer of a majority of the
Company's voting stock outstanding on the day of the transfer, (ii) sale of
substantially all of the Company's assets, to any entity or person unaffiliated
with the Company, (iii) the consolidation of the Company with or its merger
into any other unaffiliated corporation (such successor to the Company being
the "Successor"), or (iv) an act by the Company, or any entity or person
affiliated with the Company, which results in the dissolution of the Company.

(b) Termination. In the event, within one hundred and eighty (180)
days after a transfer of control, the Participant is terminated as an employee
by the Company or any of its Affiliates for any reason other than for cause,
the Participant shall be entitled to a severance payment in the amount equal to
______________. Any payments due under this Section shall be paid in equal
monthly installments over a period of _______________ months.

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<PAGE> 5

5. Employer's Remedies

The Participant acknowledges that the injury that would be suffered by
the Company as a result of a breach by the Participant of Section 3 of this
Agreement would be irreparable and substantial and that an award of monetary
damages to the Company for such a breach would be difficult, if not impossible,
to ascertain and would in any event be an inadequate remedy. Consequently, the
Company shall have the right, in addition to any other rights and remedies it
may have, to obtain injunctive relief to restrain any breach or threatened
breach or otherwise specifically to enforce any provision of this Agreement,
and the Participant hereby waives any and all defenses he may have on the
grounds of lack of jurisdiction or competence of the court to grant such an
injunction or other equitable relief. The Company will not be obligated to
post bond or other security in seeking such relief. Without limiting the
Company's rights under this Agreement, or any other remedies of the Company, if
the Participant breaches any of the provisions of Section 3 of this Agreement,
the Company will have the right to cease making any payments otherwise due to
the Participant under this Agreement, and the Participant shall reimburse the
Company for reasonable attorneys' fees and costs incurred by the Company.

6. Listing and Registration of Shares

If at any time the Committee, in its discretion, shall determine that
it is necessary or desirable to list, register or qualify the Option Shares
upon any securities exchange or under any state or federal law, or to obtain
the consent or approval of any governmental regulatory body, as a condition of,
or in connection with, the granting of the Option or the issue or purchase of
shares hereunder, the Option may not be exercised in whole or in part unless
and until such listing, registration, qualification, consent, or approval shall
have been effected or obtained free of any conditions not acceptable to the
Committee.

7. Rights as a Shareholder

Neither Participant nor Participant's legal representative shall have
any rights as a shareholder of the Company with respect to any Option Shares
until a stock certificate is properly issued for those shares.

8. Amendment of Option Agreement

This Agreement may be amended (i) by the Company or the Committee at
any time if the Company or the Committee determines, in its sole discretion,
that amendment is necessary or advisable in light of any change or amendment to
the Code or to the U.S. Treasury Regulations promulgated thereunder, or any
federal or state securities law or other law or

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<PAGE> 6

regulations, which change occurs after the Grant Date and by its terms applies
to the Option, or (ii) other than in circumstances described in clause (i)
hereinbefore, with the written consent of the Participant and the Company.

9. Method of Exercising Option

Participant may exercise the Option, or any portion thereof, by
providing the Committee with written notice of the number of shares which
Participant desires to purchase. Participant shall deliver to the Company
consideration in the form permitted in the Plan for the full purchase price of
the Option Shares to be acquired. Upon the payment of such purchase price, the
Company shall issue and deliver to Participant a certificate or certificates
for such shares and shall register such certificate or certificates in
Participant's name (or, upon Participant's written request, jointly in
Participant's name and the name of Participant's spouse, with rights of
survivorship).

10. Conflicting Provisions

The wording of this Agreement is based upon the provisions of the Plan,
under which the Option is issued. There has been no attempt made to repeat all
of the provisions of the Plan verbatim herein. In the event of any conflict
between the terms and conditions of this Agreement and the provisions of the
Plan, the provisions of the Plan shall control in all respects.

IN WITNESS WHEREOF, the Company has caused this Key Employee Incentive
Award Agreement to be duly executed by its authorized officer, and Participant
has set his/her hand and seal, as of the day and year first hereinabove
written.

Witness: THE WMF GROUP, LTD.

By:
- -------------------------- -------------------------------
Its: President and Chief Executive Officer

Witness: [Participant]

- -------------------------- -------------------------------

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<PAGE> 1
EXHIBIT 10.16

KEY EMPLOYEE DEFERRED COMPENSATION PLAN

THE WMF GROUP LTD.

1. PURPOSE OF THE PLAN AND DEFINITIONS

1.1 PURPOSE. The purpose of this Key Employee Deferred Compensation
Plan ("the Plan") of The WMF Group, Ltd. (the "Company") is to promote the
success of The WMF Group, Ltd. by providing an additional means through the
grant of Awards and the deferral of current taxable income to provide key
employees with compensation packages that is comparable with compensation for
employment with other similar companies in order to attract, motivate, retain,
and reward key employees; to provide incentives for high levels of individual
performance and improved financial performance; and to promote a close identity
between the interests of key employees and stockholders:

To accomplish these purposes, this Plan provides a means whereby key
officers and employees, and other enumerated key persons may receive Awards
and/or defer compensation.

1.2 DEFINITIONS. For purposes of this Plan, the following terms
have the following meanings:

"AWARD" means any award under this Plan, including any grant of
Restricted Shares.

"BOARD" means the Board of Directors of the Company.

"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.

"COMMISSION" means the Securities and Exchange Commission and any
successor agency.

"COMMITTEE" has the meaning given it in Section 4.1.

<PAGE> 2

"COMMON SHARES" or "SHARES" means common share of beneficial interest of
the Company, par value $0.01 per share.

"COMPANY" has the meaning given it in Section 1.1.

DEFERRED COMPENSATION AGREEMENT" means, with respect to deferred
compensation, the written agreement executed by the Company and the Participant
or other written document approved by the Committee setting forth the terms and
conditions of the deferred compensation.

"DIRECTOR" means a person duly elected or appointed and serving as a
Director of the Company in accordance with the by-laws of the Company.

"ELIGIBLE PERSON" means every person who, at or as of the Grant Date, is
(a) an Employee of the Company or an Affiliate of the Company, or (b) someone
whom the Committee designates as eligible for an Award because the person (i)
performs bona fide consulting, origination, correspondent or advisory services
for the Company or an Affiliate of the Company (other than services in
connection with the offer or sale of securities in a capital-raising
transaction) and (ii) has a direct and significant effect on the financial
development of the Company or an Affiliate of the Company, shall be eligible to
receive Awards hereunder

"EMPLOYEE" has the meaning ascribed to it for purposes of Section
3401(c) of the Code and the Treasury Regulations adopted under that Section.

"EMPLOYMENT TERMINATION" means that a Participant has ceased, for any
reason and with or without cause, to be an Employee or Director of, or a
consultant to, the Company or any Affiliate of the Company. However, the term
"Employment Termination" shall not include a Non-Employee Director ceasing to be
a Director or a transfer of a Participant from the Company to an Affiliate or
vice versa, or from one Affiliate to another, or a leave of absence duly
authorized by the Company unless the Committee has provided otherwise.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.

"GRANT DATE" has the meaning given it in Section 5.1(d).

"PARTICIPANT" means an eligible person who is granted an Award or has
entered into a Deferred Compensation Agreement.

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<PAGE> 3

"PLAN" means this Deferred Compensation Plan.

"RESTRICTED SHARES" means an Award granted under Section 6.

"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time, and any successor statute.

"TEN PERCENT SHAREHOLDER" means any person who, at the time this
definition is being applied, owns directly or indirectly (or is treated as
owning by reason of attribution rules currently set forth in Section 424 of the
Code or any successor statute), shares of the Company constituting more than ten
percent (10%) of the total combined voting power of all classes of outstanding
shares of the Company or of any Affiliate of the Company.

2. DEFERRED COMPENSATION ACCOUNT

2.1 ACCOUNT. The Committee may from time to time determine from
among such Eligible Persons, individuals who may enter into Deferred
Compensation Agreements with the Company. The Company shall credit to a book
reserve (the Deferred Compensation Account") established for this purpose on the
last day of February annually such amounts as may be deferred during the
continuation of the Participant's employment or engagement. Any such funds so
credited to the Deferred Compensation Account may be kept in cash, or invested
and reinvested in Shares, securities, or other assets (including general
corporate assets) as may be selected by the Board in its discretion, or set
forth in the Deferred Compensation Agreement. In the exercise of the foregoing
discretionary investment powers, the Board may engage investment counsel and, if
it so deems appropriate, may delegate to such counsel full or limited authority
to select the assets in which the funds are to be invested. The Participant
shall assume all risk in connection with any decrease in value of the funds
which are invested or which continue to be invested (including without
limitation the Shares) in accordance with the provisions of this Agreement, or
in connection with no increase in value. Title to a beneficial ownership of any
assets, whether cash or investments which the Company may earmark to pay the
contingent deferred compensation hereunder shall at all times remain with the
Company, and the Participant and his or her beneficiary shall not have any
property interest whatsoever in any specific asset of the Company.

2.2 SUBSTITUTION OF RESTRICTED SHARES. The Committee may substitute an
Award of Restricted Shares, as described in Section 6, for all or all portion of
the Deferred Compensation Account, , if in the opinion of the Committee such
substitution would result in more favorable tax consequences to the
Participants, or as otherwise provided in the Deferred Compensation

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<PAGE> 4

Agreement of the Participant, or for other reasons which, in the opinion of the
Committee, make such substitution desirable. The Deferred Compensation Agreement
may provide, as an exhibit or otherwise, for a separate Award Agreement
regarding the terms and conditions of any Restricted Shares.

2.3 FORFEITURE. With regard to Restricted Shares, the contingent right
of a Participant or beneficiary to receive future payments hereunder shall be
forfeited, if the Participant is terminated by the Company for cause. With
respect to the termination of the Participant's employment by the Company,
"cause" means: (i) the engaging by the Participant in any act of dishonesty in
connection with the performance of his employment duties and responsibilities,
(ii) the final judgment of any United States federal or state court convicting
the Participant of a felony, (iii) the failure of the Participant to perform his
duties or responsibilities as specified by the Company or any Affiliate of the
Company, and (iv) the breach of any provision of a Deferred Compensation
Agreement relating to confidentiality, non-competition and non-solicitation.

2.4 VESTING. The Company may at any time and from time to time order
all or any part of the value of the contingent right of a Participant or
beneficiary to receive future payments to be vested and no longer subject to
forfeiture, and may order payment of such amounts so vested on dates specified
in such orders, if it finds such action appropriate in the circumstances. The
Company may provide for a vesting schedule in a Deferred Compensation Agreement.

3. RESTRICTED SHARES SUBJECT TO THE PLAN

The total number of Restricted Shares that may be substituted or issued
under any Award, all or any part of which may be issued to any Participant, is
limited to One Million Dollars ($1,000,000) annually calculated for this purpose
on the day of such Award in the manner similar to that used to determine "fair
market value" of Shares in the Key Employee Incentive Plan of the Company. Such
Shares may consist, in whole or in part, of authorized and unissued Common
Shares or Shares reacquired in private transactions or open market purchases,
but all Shares issued under the Plan, regardless of their source, shall be
counted against said One Million Dollar ($1,000,000) annual limitation. Any
Shares that are retained by the Company upon exercise or settlement of an Award
in order to pay withholding taxes due with respect to such settlement, shall be
treated as issued to the Participant and will thereafter not be available under
the Plan. The number of Shares reserved for issuance under this Plan is subject
to adjustment in accordance with the provisions for adjustment in this Plan.

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<PAGE> 5

4. ADMINISTRATION

4.1 COMMITTEE. This plan shall be administered by a committee (the
"Committee") appointed by the Board. The Committee shall be constituted so that,
as long as Shares are registered under Section 12 of the Exchange Act, each
member of the Committee shall be a Non-Employee Director. The number of persons
that shall constitute the Committee shall be determined from time to time by a
majority of all the members of the Board; provided, however, the Committee shall
not consist of fewer than two persons.

4.2 COMMITTEE'S POWERS. Subject to the express provisions of this
Plan and Rule 16b-3 (so long as it is applicable), the Committee shall have the
authority, in its sole discretion: (a) to adopt, amend and rescind
administrative and interpretive rules and regulation relating to the Plan; (b)
to determine the eligible persons to whom, and the time or times at which, Award
shall be granted; ( c ) to determine the number of Shares that shall be the
subject of each Award; (d) to determine the terms and provisions of each Award
Agreement (which need not be identical) and any amendments thereto, including
provisions defining or otherwise relating to (i) the period or periods and
extent of exercisability of any Deferred Compensation Agreement, (ii) the extent
to which the transferability of Shares issued or transferred pursuant to any
Award is restricted, (iii) the effect of Employment Termination on an Award or
Deferred Compensation Agreement, and (iv) the effect of approved leaves of
absence (consistent with applicable Treasury Regulations); (e) to accelerate the
time of termination of substantial restrictions contained in any Deferred
Compensation Agreement; (f) to construe the respective Award Agreements,
Deferred Compensation Agreements and the Plan; (g) to make determinations of the
fair market value of Shares; (h) to waive any provision, condition or limitation
set forth in an Award Agreement or a Deferred Compensation Agreement; (i) to
delegate its duties under the Plan to such agents as it may appoint from time to
time, provided, however, that the Committee may not delegate its duties with
respect to making or exercising discretion with respect to Awards to eligible
persons if such delegation would cause Awards not to qualify for the exemptions
provided by Rule 16b-3 (unless the Board expressly determines not to have Awards
under the Plan comply with Rule 16b-3); and (j) to make all other
determinations, perform all other acts and exercise all other powers and
authority necessary or advisable for administering the Plan, including the
delegation of those ministerial acts and responsibilities as the Committee deems
appropriate. Subject to Rule 16b-3 (so long as it is applicable), the Committee
may correct any defect, supply any omission or reconcile any inconsistency in
the Plan, in any Award or in any Award Agreement in the manner and to the extent
it deems necessary or desirable to implement the Plan, and the Committee shall
be the sole and final judge of that necessity or desirability. The
determinations of the Committee on the matters referred to in this Section 4.4
shall be final and conclusive. In addition, notwithstanding any provision of
this Plan to the contrary, the Committee may not in any manner exercise
discretion under the Plan with respect to any Awards or Deferred Compensation
Agreements made to or with Non-Employee Directors.

4.3 TERM OF PLAN No awards shall be granted under this Plan after 10
years from the Effective Date of this Plan.

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<PAGE> 6

5. CERTAIN TERMS AND CONDITIONS OF AWARDS

Notwithstanding the foregoing, the Committee may provide for different
terms and conditions in any Deferred Compensation Agreement and Award Agreement
or amendment thereto as provided in Section 4.2.

5.1 ALL AWARDS. All Awards shall be subject to the following terms
and conditions:

(a) Changes in Capital Structure: If the number of
outstanding Shares is increased by means of a share dividend payable in Shares,
a share split or other subdivision or by a reclassification of Shares, then,
from and after the record date for such dividend, subdivision or
reclassification, the number and class of Shares subject to this Plan and each
outstanding Award shall be increased in proportion to such increase in
outstanding Shares and, if applicable, the then-applied exercise price of each
outstanding Award shall be correspondingly decreased. If the number of
outstanding Shares is decreased by means of a share split or other subdivision
or by a reclassification of Shares, then, from and after the record date for
such split, subdivision or reclassification, the number and class of Shares
subject to this Plan and each outstanding Award shall be decreased in proportion
to such decrease in outstanding Shares and, if applicable, the then-applicable
exercise price of each outstanding Award shall be correspondingly increased.

(b) Grant Date: Each Award Agreement, and if relevant
Deferred Compensation Agreement, shall specify the date as of which it shall be
effective (the "Grant Date").

(c) Insurance: The Company shall have the right, but not the
obligation, to purchase, invest in, or acquire insurance to fund any obligation
hereunder, or as otherwise may be determined appropriate by the Committee.

(d) Other Provisions: Each Award Agreement, or if relevant
Deferred Compensation Agreement, may contain such other terms, provisions and
conditions not inconsistent with this Plan, as may be determined by the
Committee.

(e) Withholding and Employment Taxes: If and to the extent
authorized and approved by the Committee in its sole discretion, a Participant
may elect, by means of a form of election to be prescribed by the Committee, to
have Shares which are acquired withheld by the Company or tender other Shares
owned by the Participant to the Company at the time the amount of such taxes is
determined, in order to pay the amount of such tax obligations, subject to such
limitations as the Committee determines are necessary or appropriate to comply
with Rule 16b-3 in the case of Participants who are subject to Section 16(b).

6. RESTRICTED SHARES

Restricted Shares shall be subject to the following terms and
conditions:

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<PAGE> 7

6.1 GRANT. The Committee may substitute or grant one or more Awards
of Restricted Shares to any Participants. Each Award of Restricted Shares shall
specify the number of Shares including the conditions of release or lapse of
such restrictions. Unless the Committee provides otherwise, the restrictions
shall not lapse earlier than three months after the date of the Award. Pending
the lapse of restrictions, Share certificates evidencing Restricted Shares shall
bear a legend referring to the restrictions and shall be held by the Company.
Prior to the issuance of any Restricted Shares, the Participant receiving such
Restricted Shares shall pay to the Company an amount of cash equal to, at a
minimum, the par value per Restricted Share multiplied by the number of
Restricted Shares to be issued. Upon the issuance of Restricted Shares, the
Participant may be required to furnish such additional documentation or other
assurances as the Committee may require to enforce the restrictions.

6.2 RESTRICTIONS. Except as specifically provided elsewhere in the
Plan or the Deferred Compensation Agreement, Award Agreement regarding
Restricted Shares, Restricted Shares may not be sold, assigned, transferred,
pledged or otherwise disposed of or encumbered, either voluntarily or
involuntarily, until the restrictions have lapsed. The lapse of such
restrictions may be in installments or accelerated, and/or such restrictions may
be waived, in whole or in part, based on service, performance or such other
factors or criteria as the Committee may determine.

6.3 DIVIDENDS. Unless otherwise determined by the Committee, cash
dividends with respect to Restricted Shares shall be paid to the recipient of
the Award of Restricted Shares on the normal dividend payment dates, and
dividends payable in Shares shall be paid in the form of Restricted Shares
having the same terms as the Restricted Shares upon which such dividend is paid.
Each Award Agreement for Awards of Restricted Shares, or if relevant the
Deferred Compensation Agreement, shall specify whether and, if so, the extent to
which the Participant shall be obligated to return to the Company any cash
dividends paid with respect to any Restricted Shares which are subsequently
forfeited.

6.4 FORFEITURE OF RESTRICTED SHARES. Except to the extent otherwise
provided in the governing Award Agreement, or if relevant the Deferred
Compensation Agreement, when a Participant's Employment Termination occurs, the
Participant shall forfeit all Restricted Shares still subject to restriction.

7. BONUS COMPENSATION

The Committee shall have discretion with respect to the determination of
bonus compensation for key employees. Recommendations for bonus Awards shall be
made to the Committee by the person discharging the duties of chief executive
officer of the Company under such procedure as may from time to time be
prescribed by the Committee.

Each Award shall be paid in annual installments of 20% of such Award,
the first such installment at the time of award, and the remaining installments
in March of each succeeding

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year (until the full amount of the award is paid) if earned out by the
beneficiary by continuing service with the Company, at the rate of 1/12th of the
amount of the first installment for each complete month of service beginning
with March of the year of the determination.

8. SECURITY LAWS

Nothing in this Plan or in any Award, Award Agreement, or Deferred
Compensation Agreement shall require the Company to issue any Shares with
respect to any Award if, in the opinion of counsel for the Company, that
issuance could constitute a violation of the Securities Act, any other law or
the rules of any applicable securities exchange or securities association then
in effect. As a condition to the grant or exercise of an Award, the Company may
require the Participant (or, in the event of the Participant's death, the
Participant's legal representatives, heirs, legates or distributes) to provide
written representations concerning the Participant's (or such other person's)
intentions with regard to the retention or disposition of the Shares covered by
the Award and written covenants as to the manner of disposal of such Shares as
may be necessary or useful to ensure that the grant, exercise or disposition
will not violate the Securities Act, and other law or any rule of any applicable
securities exchange or securities association then in effect. The Company shall
not be required to register any Shares under the Securities Act or register or
qualify any Shares under any state or other securities laws.

9. AMENDMENT, SUSPENSION AND TERMINATION OF PLAN

The Board may at any time amend, suspend or discontinue this Plan
without shareholder approval, except as required by applicable law; provided,
however, that no amendment, alteration, suspension or discontinuation shall be
made which would impair the rights of any Participant under any Award previously
granted, without the Participant's consent, except to conform this Plan and
Awards granted to the requirements of federal or other tax laws including
without limitation Section 422 of the Code and/or ERISA, or to the requirements
of Rule 16b-3. The Board may choose to require that the Company's shareholders
approve any amendment to this Plan in order to satisfy the requirements of
Section 422 of the Code, Rule 16b-3 or for any other reason.

10. SEVERABILITY

If any provision of this Plan is held to be illegal or invalid for any
reason, that illegality or invalidity shall not affect the remaining portions of
the Plan, but such provision shall be fully severable and the Plan shall be
construed and enforced as if the illegal or invalid provision had never been
included in this Plan. Such an illegal or invalid provision shall be replaced by
a revised provision that most nearly comports to the substance of the illegal or
invalid provision.

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11. EFFECTIVE DATE

I hereby certify that the foregoing is a full, true and correct copy of
the Key Employee Deferred Compensation Plan of The WMF Group, Ltd., a Delaware
Corporation, as in effect on the date hereof.

Witness my hand and the seal of the Corporation.

Dated: October 14, 1997 /s/ BARBARA EKSTROM
------------------------- --------------------------------
Barbara Ekstrom, Secretary

(SEAL)

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<PAGE> 1
EXHIBIT 10.17

EMPLOYEE STOCK PURCHASE PLAN

THE WMF GROUP LTD.

1. PURPOSE OF THE PLAN AND DEFINITIONS

1.1 PURPOSE. The purpose of this Employee Stock Purchase Plan
("the Plan") of The WMF Group, Ltd. (the "Company") is to promote the success of
The WMF Group, Ltd. by promoting a close identity between the interests of all
employees and stockholders by awarding to such employees certain opportunities
to acquire a stock ownership in the Company:

To accomplish these purposes, this Plan provides a means whereby each
employee who is not eligible for participation in the Key Employee Incentive
Plan is eligible to purchase at a nominal value 25 Shares, and each employee
including those eligible to participate in the Key Employee Incentive Plan, will
have an option to acquire up to 1,000 Shares for a price of $9.15 per share,
which options shall be exercisable for 10 business days commencing upon the
effectiveness of an appropriate registration statement under the Securities Act.

1.2 DEFINITIONS. For purposes of this Plan, the following terms have
the following meanings:

"AWARD" means any award under this Plan, including those set forth in
Section 2 hereof.

"BOARD" means the Board of Directors of the Company.

"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.

"COMMISSION" means the Securities and Exchange Commission and any
successor agency.

"COMMITTEE" has the meaning given it in Section 4.1.

"COMMON SHARES" or "SHARES" means common share of beneficial interest of
the Company, par value $0.01 per share.

"COMPANY" has the meaning given it in Section 1.1.

<PAGE> 2

"DIRECTOR" means a person duly elected or appointed and serving as a
Director of the Company in accordance with the by-laws of the Company.

"ELIGIBLE PERSON" means every person who, at or as of the Grant Date, is
(a) an Employee of the Company or an Affiliate of the Company, or (b) someone
whom the Committee designates as eligible for an Award because the person (i)
performs bona fide consulting, origination, correspondent, or advisory services
for the Company or an Affiliate of the Company (other than services in
connection with the offer or sale of securities in a capital-raising
transaction) and (ii) has a direct and significant effect on the financial
development of the Company or an Affiliate of the Company, shall be eligible to
receive Awards hereunder

"EMPLOYEE" has the meaning ascribed to it for purposes of Section
3401(c) of the Code and the Treasury Regulations adopted under that Section.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.

"GRANT DATE" means the date of "Share Distribution" as that term is
defined the appropriate registration statement of the Shares under the
Securities Act.

"OPTION" means an option granted under Section 2.

"PARTICIPANT" means an eligible person who is granted an Award.

"PLAN" means this Employee Stock Purchase Plan.

"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time, and any successor statute.

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<PAGE> 3

2. PURCHASE PLAN

2.1 TWENTY-FIVE SHARES AT PAR VALUE. Each Eligible Person, who
has not been designated by the Company to participate in the Key Employee
Incentive Plan, has the non-transferable option to purchase 25 Shares from the
Company at a price per share equal to the par value of the stock. Unless the
Company is otherwise advised by the Eligible Person that he or she does not wish
to participate, the Company shall issue the 25 Shares to such Eligible Person
within the option period.

2.2 ONE THOUSAND SHARES AT $9.15. Each Eligible Person has the
non-transferable option to purchase up to 1,000 Shares from the Company at a
price per share equal to $9.15.

2.3 TIME LIMIT. The options awarded in Section 2.1 and 2.2 shall be
exercisable for 10 business days commencing upon the Grant Date.

3. SHARES SUBJECT TO THE PLAN

The number of Shares reserved for issuance under this Plan shall be as
determined by the Committee.

4. ADMINISTRATION

4.1 COMMITTEE. This plan shall be administered by a committee (the
"Committee") appointed by the Board. The Committee shall be constituted so that,
as long as Shares are registered under Section 12 of the Exchange Act, each
member of the Committee shall be a Non-Employee Director. The number of persons
that shall constitute the Committee shall be determined from time to time by a
majority of all the members of the Board; provided, however, the Committee shall
not consist of fewer than two persons.

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<PAGE> 4

acts and responsibilities as the Committee deems appropriate. Subject to Rule
16b-3 (so long as it is applicable), the Committee may correct any defect,
supply any omission or reconcile any inconsistency in the Plan, in any Award in
the manner and to the extent it deems necessary or desirable to implement the
Plan, and the Committee shall be the sole and final judge of that necessity or
desirability. The determinations of the Committee on the matters referred to in
this Section 4.2 shall be final and conclusive. In addition, notwithstanding
any provision of this Plan to the contrary, the Committee may not in any manner
exercise discretion under the Plan with respect to any Awards made to or with
Non-Employee Directors.

4.3 TERM OF PLAN No Awards shall be granted under this Plan after
10 years from the Effective Date of this Plan.

5. SECURITY LAWS

Nothing in this Plan or in any Award, shall require the Company to issue
any Shares with respect to any Award if, in the opinion of counsel for the
Company, that issuance could constitute a violation of the Securities Act, any
other law or the rules of any applicable securities exchange or securities
association then in effect. As a condition to the grant or exercise of an Award,
the Company may require the Participant (or, in the event of the Participant's
death, the Participant's legal representatives, heirs, legates or distributes)
to provide written representations concerning the Participant's (or such other
person's) intentions with regard to the retention or disposition of the Shares
covered by the Award and written covenants as to the manner of disposal of such
Shares as may be necessary or useful to ensure that the grant, exercise or
disposition will not violate the Securities Act, and other law or any rule of
any applicable securities exchange or securities association then in effect. The
Company shall not be required to register any Shares under the Securities Act or
register or qualify any Shares under any state or other securities laws.

6. AMENDMENT, SUSPENSION AND TERMINATION OF PLAN

The Board may at any time amend, suspend or discontinue this Plan
without shareholder approval, except as required by applicable law; provided,
however, that no amendment, alteration, suspension or discontinuation shall be
made which would impair the rights of any Participant under any Award previously
granted, without the Participant's consent, except to conform this Plan and
Awards granted to the requirements of federal or other tax laws including
without limitation Section 422 of the Code and/or ERISA, or to the requirements
of Rule 16b-3. The Board may choose to require that the Company's shareholders
approve any amendment to this Plan in order to satisfy the requirements of
Section 422 of the Code, Rule 16b-3 or for any other reason.

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<PAGE> 5

7. SEVERABILITY

If any provision of this Plan is held to be illegal or invalid for any
reason, that illegality or invalidity shall not affect the remaining portions of
the Plan, but such provision shall be fully severable and the Plan shall be
construed and enforced as if the illegal or invalid provision had never been
included in this Plan. Such an illegal or invalid provision shall be replaced by
a revised provision that most nearly comports to the substance of the illegal or
invalid provision.

8. EFFECTIVE DATE

I hereby certify that the foregoing is a full, true and correct copy of
the Employee Stock Purchase Plan of The WMF Group, Ltd., a Delaware Corporation,
as in effect on the date hereof.

Witness my hand and the seal of the Corporation.

Dated: October 14, 1997 /s/ BARBARA EKSTROM
------------------------- ----------------------------------
Barbara Ekstrom, Secretary

(SEAL)

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EXHIBIT 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
and to all references to our Firm included in or made a part of this
registration statement.

/s/ ARTHUR ANDERSEN LLP

Arthur Andersen LLP

Washington, D.C.
October 29, 1997

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EXHIBIT 23.3

The Board of Directors
The WMF Group, Ltd.

We consent to the use of our report, included herein on Form S-1, on the
consolidated balance sheet of WMF Holdings Ltd. (a wholly owned subsidiary of
Commonwealth Overseas Trading Company Limited), and subsidiaries as of December
31, 1995, and the related consolidated statements of operations, changes in
stockholder's equity and cash flows for the years ended December 31, 1995 and
1994.

/s/ KPMG Peat Marwick LLP

Washington, D.C.
October 30, 1997